10-K – 2026-02-24 – kdp-20251231.htm

RISKS RELATED TO THE SEPARATION
The Separation may not be completed on the terms or timeline currently contemplated, if at all, and will involve significant time, expenses, and resources, which could adversely affect our business.
On August 25, 2025, we announced our intention to separate our beverage and coffee portfolios into two independent, publicly traded companies via a tax-free spin-off of our coffee business. The anticipated Separation is expected to occur subsequent to the completion of the JDE Peet's Acquisition. We cannot assure that the Separation will be completed on the anticipated timeline, if at all, or that the terms of the Separation will not change. The transaction will follow the satisfaction of customary conditions, including reviews and final approval by our Board, relevant tax opinions with respect to the tax-free nature of the transaction, effectiveness of appropriate filings with the SEC, and acceptance of the spin-off company for listing by a national securities exchange approved by our Board, the completion of audited financials of the new independent company, among others. The failure to satisfy any of the required conditions could delay the completion of the Separation for a significant period of time or prevent it from occurring at all.
Unanticipated developments, including changes in the competitive conditions of our markets, possible delays in obtaining various tax opinions or rulings or failure of the spin-off transaction to qualify for non-recognition treatment for U.S. federal income tax purposes, the filing and effectiveness of appropriate filings with the SEC and the listing on a stock exchange, negotiating challenges, the uncertainty of the financial markets, changes in the law, and challenges in executing the Separation, could delay or prevent the completion of the Separation, or cause the Separation to occur on terms or conditions that are different or less favorable than initially expected. Any changes to the Separation or delay in completing the Separation could cause us not to realize some or all of the expected benefits, or realize them on a different timeline than initially expected. Further, our Board could decide, either because of a failure of conditions or because of market or other factors, to abandon the Separation. No assurance can be given as to whether and when the Separation will occur.
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Whether or not we complete the Separation, our ongoing business may be adversely affected, and we may be subject to certain risks and consequences as a result of pursuing the separation of our two businesses, including the following:
• We anticipate that the process of completing the Separation will be time-consuming and involve significant additional costs and expenses, which may not yield a discernible benefit if the Separation is not completed. Additionally, if the Separation is not completed, we will still be required to pay certain costs and expenses incurred in connection therewith, such as professional fees.
• Executing the Separation will require significant time and attention from our senior management and employees, which may impact management's attention to operating and growing our business and could adversely affect our business. Our employees may also be distracted due to uncertainty about their future roles with the separate companies pending completion of the Separation.
• We may also experience increased difficulties in attracting, retaining, and motivating employees leading up to, and following, completion of the Separation, which could harm our businesses.
• Some of our customers or suppliers may delay or defer decisions or may end their relationships with us.
• We may experience negative reactions from the financial markets if we fail to complete the Separation or fail to complete it on a timely basis.
• We could incur substantial additional costs and experience temporary business interruptions.
• Transfer or assignment to us of some contracts and other assets will require the consent of a third party. If such consent is not given, we may not be entitled to the benefit of such contracts, investments, and other assets in the future.
• The announcement and pendency of the Separation may cause some investors to sell shares of our common stock, which could create greater volatility or decline in the price of our shares.
Any of the above factors could cause the Separation, or the failure to execute the Separation, to have an adverse effect on our business and financial performance.
We may be unable to achieve some or all of the anticipated strategic and financial benefits from the Separation.
We may not realize the anticipated strategic, financial, operational, or other benefits from the Separation. We also cannot predict with certainty when the expected benefits will occur or the extent to which they will be achieved. If the Separation is completed, our operational and financial profile will change and we will face new risks. As two independent, publicly traded companies, our beverage and coffee businesses will each be smaller, less-diversified companies and may be more vulnerable to changing market conditions. There is no assurance that each separate company will be successful. The announcement and/or completion of the Separation may cause uncertainty for or disruptions with our customers, partners, suppliers, and employees, which may negatively impact these relationships or our operations. In addition, we will incur costs in connection with, or as a result of, the spin-offs, including costs of operating as independent, publicly-traded companies that the two businesses will no longer be able to share. Those costs may exceed our estimates or could negate some of the benefits we expect to realize. Significant unexpected costs or failure to realize the intended benefits of the Separation could result in a material adverse effect on the business, financial condition, results of operations, and trading price of us or the separated businesses.
Following the Separation, we may not maintain a satisfactory credit rating, which could adversely affect the financial performance of our businesses.
It is management's intent to structure each stand-alone business in a way to achieve investment grade credit ratings upon completion of the Separation. If we are not able to achieve or maintain satisfactory credit ratings post-separation, whether as a result of our actions or factors which are beyond our control, the independent businesses may face increased borrowing costs and limited access to raise funds in capital markets. A failure to achieve or maintain investment grade ratings could also impact business relationships with vendors, suppliers, regulators, and other business partners. There is no guarantee that we will be able to achieve or maintain our targeted credit ratings, and failure to do so may adversely affect the liquidity and financial performance of the businesses following the proposed Separation.
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Following the Separation, the price of our common stock may decline and may experience greater volatility.
Upon completion of the Separation, the price of our common stock may decline compared to its level immediately prior to, as it will no longer include the value of the separated business. In addition, the price of our common stock may experience greater volatility until the market has fully analyzed our value without the separated business. We can not guarantee that the combined value of the shares of the two resulting companies will be equal to or greater than what the value of our common stock would have been had the proposed Separation not occurred.
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ITEM 1B. UNRESOLVED STAFF COMMENTS
None.

ITEM 1C. CYBERSECURITY
We, and our third-party service providers, use information technology to support our global business processes and activities, which exposes us to cybersecurity risks. Our overall risk management system includes ongoing cybersecurity risk assessment and reporting, incident management, and a diligence and risk management process for third-party service providers. Employees with network access participate in ongoing phishing, social engineering, and cybersecurity awareness training efforts, and we also conduct periodic tabletop exercises led by external consultants.
Our cybersecurity risk assessment and reporting process leverages the National Institute of Standards and Technology's Cybersecurity Framework and is managed by our CISO, whose team comprises both internal personnel and third-party cybersecurity consultants. The CISO provides periodic reports to management, including our CEO, as well as other executive leadership members, and to the Audit and Finance Committee of our Board , which has oversight for cybersecurity risk management. These reports include updates on critical cybersecurity risks and the threat landscape; updates on the status of ongoing cybersecurity improvement initiatives, the internal control environment, and ongoing internal audit activities; and, if relevant, the status of actions taken with respect to certain cybersecurity incidents identified during the period.
We have an overall incident management plan, which is intended to provide guidance and protocols to facilitate timely notification and communication to key internal and external stakeholders, as appropriate, during an incident. A subset of this incident management plan is our Security Incident Response Plan, or SIRP, which is based on leading cybersecurity incident response practices. Incidents may be escalated to the CISO, our Chief Information Officer, our Chief Legal Officer, or other members of management or the Board, depending on the severity of the incident, and are handled according to the SIRP protocols, which includes incident detection and analysis; containment, eradication and recovery; and post-incident monitoring. We have developed a framework for assessing the materiality of any such incidents, including a committee responsible for determining whether the incident is material for disclosure. The committee includes our CISO, our Chief Information Officer, our Chief Legal Officer, our Senior Vice President and Controller (Principal Accounting Officer), our head of Internal Audit, and other members of management with relevant subject matter expertise. We also maintain cybersecurity insurance coverage that is intended to cover potential costs related to cybersecurity incidents and information systems failures, subject to customary limitations, exclusions, and deductibles.
Our CISO has more than 27 years of experience in cybersecurity and information technology, including, prior to joining KDP in 2019, more than 11 years as a principal in Ernst & Young's cybersecurity practice. Our CISO reports directly to our Chief Information Officer, who also has over 38 years of experience in information technology and cybersecurity.
To date, we have not identified any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, which have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition. For additional description of cybersecurity risks and potential related impacts on us, refer to the risk factors captioned "Our use of information technology and third-party service providers exposes us to cybersecurity breaches and other business disruptions that could adversely affect us" and "The use of information technology by our third-party commercial partners and service providers exposes us to business disruptions or other negative impacts that could adversely affect us" in Item 1A, Risk Factors, in this Annual Report on Form 10-K.
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ITEM 2. PROPERTIES
We have two global corporate headquarters, located in Frisco, Texas and Burlington, Massachusetts, both of which are leased.
The following table summarizes our principal manufacturing plants and principal warehouse and distribution facilities by geography and reportable segment as of December 31, 2025:

U.S. Refreshment Beverages U.S. Coffee International Total
Owned Leased Owned Leased Owned Leased Owned Leased
United States
Production facilities 7   12   —   5   —   —   7   17  
Warehouse and distribution facilities 26   66   —   7   —   —   26   73  
Foreign
Production facilities 1   —   —   —   3   1   4   1  
Warehouse and distribution facilities —   —   —   —   5   65   5   65  
Total 34   78   —   12   8   66   42   156  

We believe our facilities are well-maintained and adequate, that they are being appropriately utilized, and that they have sufficient capacity for their present intended purposes. The extent of utilization of such facilities varies based on seasonal demand for our products and the status of our investments to maintain or upgrade various technologies or equipment within such facilities. We ceased operations at our Windsor, Virginia manufacturing facility during the year ended December 31, 2025.
We periodically review our space requirements, and we look to consolidate and dispose or sublet facilities we no longer need as appropriate.

ITEM 3. LEGAL PROCEEDINGS
We are occasionally subject to litigation or other legal proceedings relating to our business. Refer to Note 18 of the Notes to our Consolidated Financial Statements related to commitments and contingencies, which is incorporated herein by reference.

ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is listed on Nasdaq's Global Select Market under the ticker symbol "KDP". As of December 31, 2025, there wer e 7,159 stock holders of record of our common stock. Our Board has declared a regular quarterly cash dividend and expects to continue to pay such dividends on a quarterly basis.
COMPARISON OF TOTAL STOCKHOLDER RETURN
The following performance graph compares the cumulative total returns of KDP for a five-year period with the cumulative total returns of the S&P 500 Index and the S&P Food and Beverage Select Industry Index. The graph assumes that $100 was invested on December 31, 2020, with dividends reinvested quarterly. Performance shown in the graph is not necessarily indicative of future performance.

ISSUER REPURCHASES OF EQUITY SECURITIES
On October 1, 2021, our Board authorized a share repurchase program of up to $4 billion of our outstanding common stock, enabling us to return value to shareholders. The $4 billion authorization was effective for four years, from January 1, 2022 through December 31, 2025. We did not repurchase any shares during the fourth quarter of 2025.

ITEM 6. [RESERVED]
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
This section of this Annual Report on Form 10-K generally discusses the years ended December 31, 2025 and 2024 and year-over-year comparisons between the years ended December 31, 2025 and 2024. Discussions of the periods prior to the year ended December 31, 2024 that are not included in this Annual Report on Form 10-K are found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024 and the discussion therein for the year ended December 31, 2024 compared to the year ended December 31, 2023 is incorporated by reference into this Annual Report.
This Annual Report on Form 10-K contains the names of some of our owned or licensed trademarks, trade names and service marks, which we refer to as our brands. All of the product names included in this Annual Report on Form 10-K are either our registered trademarks or those of our licensors.

OVERVIEW
KDP is a leading beverage company in North America that manufactures, markets, distributes, and sells hot and cold beverages and single serve brewing systems. We have a broad portfolio of iconic beverage brands, including Dr Pepper, Canada Dry, Mott's, A&W, Peñafiel, GHOST, 7UP, Snapple, Green Mountain Coffee Roasters, Clamato, The Original Donut Shop, and Core Hydration, as well as the Keurig brewing system. Our beverage brands are some of the most recognized beverage brands in North America, with significant consumer awareness levels and long histories that evoke strong emotional connections with consumers. We offer more than 125 owned, licensed, and partner brands, supported by powerful distribution capabilities.
SEGMENTS
Our operating and reportable segments are as follows:
• The U.S. Refreshment Beverages segment reflects sales in the U.S. from the manufacture and distribution of branded concentrates, syrups, finished beverages, and other consumables, including the sales of our own brands and third-party brands, to third-party bottlers, distributors, and retailers.
• The U.S. Coffee segment reflects sales in the U.S. from the manufacture and distribution of finished goods relating to our K-Cup pods, single serve brewers, and other coffee products to partners, retailers, and directly to consumers through our Keurig.com website.
• The International segment reflects sales in international markets, including the following:
◦ Sales in Canada, Mexico, the Caribbean, and other international markets from the manufacture and distribution of branded concentrates, syrup, and finished beverages, including sales of our own brands and third-party brands, to third-party bottlers, distributors, and retailers.
◦ Sales in Canada from the manufacture and distribution of finished goods relating to our single serve brewers, K-Cup pods, and other coffee products.
VOLUME
In evaluating our performance, we use different volume measures for LRB and for K-Cup pods and appliances.
For LRB, we measure our sales volume in 288 fluid ounce equivalent cases.
• For beverage concentrates, we measure our sales volume as concentrate case sales for concentrates sold by us to our bottlers and distributors. A concentrate case is the amount of concentrate needed to make one case of 288 fluid ounces of finished beverage, the equivalent of 24 twelve-ounce servings. It does not include any other component of the finished beverage other than concentrate.
• For packaged beverages, we measure volume as case sales to customers. A case sale represents a unit of measurement equal to 288 fluid ounces of packaged beverage sold by us. Case sales include both our owned brands and certain brands licensed to and/or distributed by us.
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For our K-Cup pods and appliances, we measure our sales volume as the number of appliances and the number of individual K-Cup pods sold to our customers.

EXECUTIVE SUMMARY

Financial Overview

As Reported, in millions (except Diluted EPS)

Uncertainties and Trends Affecting Our Business
Refer to Item 1A, Risk Factors , as well as the Uncertainties and Trends Affecting Liquidity and Capital Resources section below, for more information about risks and uncertainties facing us.
Refer to Note 7 of the Notes to our Consolidated Financial Statements and Item 7A, Quantitative and Qualitative Disclosures About Market Risk for management's discussion of how we manage our exposure to foreign exchange risk, interest rate risk, and commodity risk.
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RESULTS OF OPERATIONS
References in the financial tables to percentage changes that are not meaningful are denoted by "NM".

For the Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024:
Consolidated Operations
The following table sets forth our consolidated results of operations for the years ended December 31, 2025 and 2024:

  For the Year Ended December 31, Dollar Percentage
(in millions, except per share amounts) 2025 2024 Change Change
Net sales $ 16,603   $ 15,351  $ 1,252  8.2  %
Cost of sales 7,604   6,822  782  11.5  %
Gross profit 8,999   8,529  470  5.5  %
Selling, general, and administrative expenses 5,351   5,013  338  6.7  %
Impairment of goodwill —   306  (306) NM
Impairment of intangible assets 78   412  (334) NM

Other operating (income) expense, net (5) 207  (212) NM
Income from operations 3,575   2,591  984  38.0  %
Interest expense, net 754   735  19  2.6  %

Other expense (income), net 134   (58) 192  NM
Income before provision for income taxes 2,687   1,914  773  40.4  %
Provision for income taxes 608   473  135  28.5  %
Net income $ 2,079   $ 1,441  $ 638  44.3  %

Earnings per common share:    
Basic $ 1.53   $ 1.06  $ 0.47  44.3  %
Diluted 1.53   1.05  0.48  45.7  %

Gross margin 54.2   % 55.6  % (140) bps
Operating margin 21.5   % 16.9  % 460 bps
Effective tax rate 22.6   % 24.7  % (210) bps

Sales Volumes

Percentage Change
LRB 1.0   %
K-Cup pods (3.9) %
Appliances (18.0) %

Net Sales Drivers

Percentage Change
Volume / mix (1)
4.8   %
Net price realization 3.8   %
FX (0.4) %
Total 8.2   %

(1) The acquisition of GHOST contributed 3.8 percentage points to our consolidated volume / mix growth for the year ended December 31, 2025.
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Gross profit increased $470 million, or 5.5%, to $8,999 million for the year ended December 31, 2025 compared to $8,529 million in the prior year. This performance primarily reflected the gross profit impact of net sales growth (9 percentage points), partially offset by the net unfavorable impact from changes in ingredients, materials, and productivity, inclusive of tariffs (4 percentage points).
SG&A expenses increased $338 million, or 6.7%, to $5,351 million for the year ended December 31, 2025 compared to $5,013 million in the prior year, primarily driven by increased transportation and warehousing expenses (4 percentage points), costs associated with the JDE Peet's Acquisition and Separation (2 percentage points), and higher labor costs (2 percentage points).
Impairment of goodwill in the prior year reflected a non-cash impairment charge of $306 million within the U.S. Warehouse Direct reporting unit in the U.S. Refreshment Beverages segment. Refer to Note 6 of the Notes to our Consolidated Financial Statements for further information.
Impairment of intangible assets decreased $334 million to $78 million, driven by the favorable comparison of non-cash impairment charges for intangible brand assets compared to the prior year. Refer to Note 6 of the Notes to our Consolidated Financial Statements for further information.
Other operating (income) expense, net reflected a favorable change of $212 million for the year ended December 31, 2025, primarily driven by the favorable comparison of the $225 million termination fee associated with ABI incurred in the prior year. Refer to Note 4 of the Notes to our Consolidated Financial Statements for further information.
Income from operations increased $984 million, or 38.0%, to $3,575 million for the year ended December 31, 2025 compared to $2,591 million in the prior year, driven by the favorable comparison of our non-cash impairment charges for goodwill and intangible assets compared to the prior year, increased gross profit, and the favorable comparison to the termination fee associated with ABI incurred in the prior year. These benefits were partially offset by increased SG&A expenses.
Interest expense, net increased $19 million, or 2.6%, to $754 million for the year ended December 31, 2025 compared to $735 million for the prior year, primarily driven by increased debt and higher financing costs (12 percentage points), which were mostly offset by a favorable year-over-year change in unrealized mark-to-market activity (10 percentage points).
Other expense (income), net reflected an unfavorable change of $192 million for the year ended December 31, 2025, primarily driven by an increase of $214 million in our mandatory redemption liability for GHOST.
The effective tax rate decreased 210 bps to 22.6% for the year ended December 31, 2025, compared to 24.7% in the prior year, primarily driven by the favorable comparison of the tax impact of our non-cash goodwill impairment charge in the prior year (230 bps).
Net income increased $638 million, or 44.3%, to $2,079 million for the year ended December 31, 2025, primarily driven by increased income from operations, partially offset by the increase in our mandatory redemption liability for GHOST.
Diluted EPS increased 45.7% to $1.53 per diluted share as compared to $1.05 in the prior year.
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Results of Operations by Segment
The following tables provide certain results of operations for our reportable segments for the years ended December 31, 2025 and 2024:

For the Year Ended December 31, Percentage Change
(in millions) 2025 2024
Net sales
U.S. Refreshment Beverages $ 10,439   $ 9,331  11.9  %
U.S. Coffee 3,990   3,967  0.6  %
International 2,174   2,053  5.9  %
Total net sales $ 16,603   $ 15,351  8.2  %

Income from operations    
U.S. Refreshment Beverages $ 2,939   $ 1,878  56.5  %
U.S. Coffee 962   1,079  (10.8) %
International 546   545  0.2  %
Unallocated corporate costs (872) (911) (4.3) %
Total income from operations $ 3,575   $ 2,591  38.0  %

Operating margin
U.S. Refreshment Beverages 28.2   % 20.1  % 810 bps
U.S. Coffee 24.1   % 27.2  % (310) bps
International 25.1   % 26.5  % (140) bps

Sales Volumes

LRB K-Cup Pods Appliances
U.S. Refreshment Beverages 0.7   % —   % —   %
U.S. Coffee NM (4.8) % (19.9) %
International 2.3   % 2.0   % (1.7) %

Net Sales Drivers

Volume / Mix (1)
Net Price Realization FX Total
U.S. Refreshment Beverages 9.0   % 2.9   % —   % 11.9   %
U.S. Coffee (4.2) % 4.8   % —   % 0.6   %
International 3.1   % 6.2   % (3.4) % 5.9   %

(1) The acquisition of GHOST contributed 6.2 percentage points to our volume / mix growth in U.S. Refreshment Beverages for the year ended December 31, 2025.
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U.S. Refreshment Beverages
Sales volume increased 0.7% for the year ended December 31, 2025, led by growth in our energy portfolio, including the acquisition of GHOST, and in carbonated soft drinks. These benefits were partially offset by softness in our still beverages portfolio.
Net sales increased 11.9% to $10,439 million for the year ended December 31, 2025, led by volume / mix growth, including a benefit from the acquisition of GHOST, as well as higher net price realization.
Income from operations increased 56.5% to $2,939 million for the year ended December 31, 2025. This performance was led by the favorable comparison of our non-cash impairment charges for goodwill and intangible assets compared to the prior year (34 percentage points), the gross profit impact of net sales growth (32 percentage points), and the favorable comparison of the termination fee associated with ABI incurred in the prior year (12 percentage points). These benefits were partially offset by increased transportation and warehousing expenses (8 percentage points) and higher labor costs (5 percentage points).

U.S. Coffee
Appliance volume decreased 19.9%, reflecting price elasticity impacts, category softness, and continued retailer inventory management. K-Cup pod volume decreased 4.8%, reflecting price elasticity impacts.
Net sales increased 0.6% to $3,990 million for the year ended December 31, 2025, driven by higher net price realization, partially offset by unfavorable volume / mix.
Income from operations decreased 10.8% to $962 million for the year ended December 31, 2025, driven by a net unfavorable change in ingredients, materials, and productivity, inclusive of tariffs (22 percentage points), partially offset by the benefit of net sales growth (11 percentage points).

International
LRB sales volume increased 2.3%. Appliance volumes decreased 1.7%, and K-Cup pod volumes increased 2.0%.
Net sales increased 5.9% to $2,174 million in the year ended December 31, 2025, reflecting higher net price realization and volume / mix growth, partially offset by unfavorable FX translation.
Income from operations increased 0.2% to $546 million for the year ended December 31, 2025, reflecting the benefit from the gross profit impact of net sales growth (17 percentage points), which was mostly offset by a net unfavorable impact from changes in ingredients, materials, and productivity (10 percentage points) and increased transportation and warehousing expenses (7 percentage points).

LIQUIDITY AND CAPITAL RESOURCES
Overview
We believe our financial condition and liquidity remain strong. We manage all aspects of our business, including monitoring the financial health of our customers, suppliers, and other third-party relationships, implementing gross margin enhancement strategies through our productivity initiatives, and developing new opportunities for growth such as innovation and agreements with partners to distribute brands that are accretive to our portfolio.
Cash generated by our foreign operations is generally repatriated to the U.S. periodically. We do not expect restrictions or taxes on repatriation of cash held outside the U.S. to have a material effect on our overall business, liquidity, financial condition, or results of operations for the foreseeable future.
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The following summarizes our cash activity for the years ended December 31, 2025, 2024, and 2023:

Principal Sources of Capital Resources
Our principal sources of liquidity are our cash and cash equivalents, cash generated from our operations, and borrowing capacity currently available under our 2025 Revolving Credit Agreement. Additionally, we have an uncommitted commercial paper program where we can issue unsecured commercial paper notes on a private placement basis. Based on our current and anticipated level of operations, we believe that our operating cash flows will be sufficient to meet our anticipated obligations related to our normal course of business (excluding the impacts of the JDE Peet's Acquisition described below) for the next twelve months and thereafter for the foreseeable future. To the extent that our operating cash flows are not sufficient to meet our liquidity needs, we may utilize cash on hand or amounts available under our financing arrangements. From time to time, we may seek additional deleveraging, refinancing, or liquidity enhancing transactions, including entering into transactions to repurchase or redeem outstanding indebtedness or otherwise seek transactions to reduce interest expense, extend debt maturities, and improve our capital and liquidity structure .

Sources of Liquidity - Operations
Net cash provided by operating activities decreased $228 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024. The decrease was driven by the unfavorable comparison in working capital, partially offset by a higher net income adjusted for non-cash items in the current period.

Sources of Liquidity - Financing

Refer to Note 5 of the Notes to our Consolidated Financial Statements for management's discussion of our financing arrangements.
As of December 31, 2025, we were in compliance with all debt covenants, and we have no reason to believe that we will be unable to satisfy these covenants.
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We also have an active shelf registration statement, filed with the SEC on August 15, 2025, which allows us to issue an indeterminate number or amount of common stock, preferred stock, debt securities, and warrants from time to time in one or more offerings at the direction of our Board.

Credit Ratings
Our credit ratings are as follows:

Rating Agency Long-Term Debt Rating Commercial Paper Rating Outlook Date of Last Change
Moody's Baa1 P-2 Ratings Under Review August 25, 2025
S&P BBB A-2 Watch Negative August 25, 2025

As a result of our announcement of the JDE Peet's Acquisition and the corresponding financing arrangements anticipated for the transaction, Moody's and S&P have revised their outlook on our credit ratings. On August 25, 2025, Moody's placed KDP ratings under review for downgrade, and S&P has placed KDP on CreditWatch Negative.
These debt and commercial paper ratings impact the interest we pay on our financing arrangements. A downgrade of one or both of our debt and commercial paper ratings could increase our interest expense and decrease the cash available to fund anticipated obligations.

Principal Uses of Capital Resources
Our capital allocation priorities are investing to grow our business both organically and inorganically, strengthening our balance sheet, and returning cash to shareholders through regular quarterly dividends. We dynamically adjust our cash deployment plans based on the specific opportunities available in a given period, but over time we allocate capital to balance each of these priorities.
Regular Quarterly Dividends
We have declared total dividends of $0.92 per share and $0.89 per share for the years ended December 31, 2025 and 2024, respectively.
Acquisitions of Businesses and Purchases of Intangible Assets
From time to time, we acquire brand ownership companies to expand our portfolio. We also invest in the expansion of our DSD network through transactions with strategic independent bottlers or third-party brand ownership companies to enhance competitive distribution scale. These transactions could be accounted for either as an acquisition of a business or, if the majority of the transaction price represents the acquisition of a single intangible asset, as an asset acquisition. In the second quarter of 2025, we completed the Dyla acquisition. Refer to Note 4 of the Notes to our Consolidated Financial Statements for additional information. Purchases of intangible assets were $17 million and $59 million for the years ended December 31, 2025 and 2024, respectively.
Capital Expenditures
Purchases of property, plant, and equipment were $486 million and $563 million for the years ended December 31, 2025 and 2024, respectively.
Capital expenditures, which includes both purchases of property, plant, and equipment and amounts included in accounts payable and accrued expenses, primarily related to investments in manufacturing capabilities, both in the U.S. and internationally, for the years ended December 31, 2025 and 2024. Capital expenditures included in accounts payable and accrued expenses were $204 million and $220 million for the years ended December 31, 2025 and 2024, respectively, which primarily related to these investments.
Repurchases of Common Stock
Our Board authorized a four-year share repurchase program of up to $4 billion of our outstanding common stock, which ended on December 31, 2025. Repurchases and retirements of common stock, including payments on our share excise tax obligation, were $9 million and $1,110 million during the years ended December 31, 2025 and 2024, respectively.
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Equity Method Investments
From time to time, we invest in beverage startup companies or in brand ownership companies to grow our presence in certain product categories, or enter into various licensing and distribution agreements to expand our product portfolio. Our investments generally involve acquiring a minority interest in equity securities of a company, in certain cases with a protected path to ownership at our future option.

JDE Peet's Acquisition
We entered into various transactions in order to finance the JDE Peet's Acquisition, including the Bridge Credit Agreement and Delayed Draw Term Loan Agreement. Refer to Note 5 of the Notes to our Consolidated Financial Statements for additional information on these borrowing arrangements. We additionally entered into the JV Transaction Agreement, under which the JV Investors will make a minority investment into the Pod Manufacturing JV for an aggregate purchase price of $4 billion. We also entered into the Preferred Investment Agreement, under which we will issue and sell 4.5 million shares of Convertible Preferred Stock for an aggregate purchase price of $4.5 billion. These transactions are expected to be completed substantially concurrently with the closing of the JDE Peet's Acquisition. Refer to Note 3 and Note 22 of the Notes to our Consolidated Financial Statements for additional information. We may issue additional debt securities and pursue other financing options, as warranted.

Residual Value Guarantees
We have a number of leasing arrangements and one licensing arrangement with VIEs for which we are not the primary beneficiary. Each one of these arrangements contain an RVG. As of December 31, 2025, we have not recorded any liabilities as it is not probable that we will have to make any payments required under the RVGs. Refer to Note 19 of the Notes to our Consolidated Financial Statements for further information.

Uncertainties and Trends Affecting Liquidity and Capital Resources
Disruptions in financial and credit markets, including those caused by inflation, global economic uncertainty or economic downturns, fluctuations in interest rates, or the imposition of new tariffs or changes to existing tariffs, trade wars, barriers or restrictions, or threats of such actions, and related uncertainty, may impact our ability to manage normal commercial relationships with our customers, suppliers, and creditors, and may also impact our ability to access liquidity through financial markets in a timely and cost-effective manner. These disruptions could have a negative impact on the ability of our customers to timely pay their obligations to us, thus reducing our cash flow, or the ability of our vendors to timely supply materials.
Customer and consumer demand for our products may also be impacted by the risk factors discussed under "Risk Factors" in Part 1, Item 1A in this Annual Report on Form 10-K, as well as subsequent filings with the SEC, that could have a material effect on production, delivery, and consumption of our products, which could result in a reduction in our sales volume.
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We believe that the following events, trends, and uncertainties may also impact liquidity:
• Our ability to either repay existing debt maturities through cash flow from operations or refinance through future issuances of senior unsecured notes;
• Our ability to access and/or renew our committed financing arrangements ;
• Our ability to issue unsecured uncommitted commercial paper notes on a private placement basis;
• Financing and other funding arrangements entered into in connection to the JDE Peet's Acquisition;
• Future mergers, acquisitions, or debt or equity investments, which may include brand ownership companies, regional bottling companies, distributors, and/or distribution rights to further extend our geographic coverage;
• Seasonality and other variability in our operating cash flows, which could impact short-term liquidity;
• Our continued payment of regular quarterly dividends;
• Future repurchases of our common stock or special dividends to drive total shareholder return;
• Our continued capital expenditures;
• Fluctuations in our tax obligations; and
• A potential significant downgrade in our credit ratings, which could limit i) our ability to issue debt at terms that are favorable to us, or ii) a financial institution's willingness to participate in our accounts payable program and reduce the attractiveness of the accounts payable program to participating suppliers who may sell payment obligations from us to financial institutions, which could impact our accounts payable program.
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CRITICAL ACCOUNTING ESTIMATES
The process of preparing our consolidated financial statements in conformity with U.S. GAAP requires the use of estimates and judgments that affect the reported amounts of assets, liabilities, revenue, and expenses. Critical accounting estimates are both fundamental to the portrayal of a company's financial condition and results and require difficult, subjective, or complex estimates and assessments. These estimates and judgments are based on historical experience, future expectations, and other factors and assumptions we believe to be reasonable under the circumstances. The most significant estimates and judgments are reviewed on an ongoing basis and revised when necessary. We have not made any material changes in the accounting methodology we use to assess or measure our critical accounting estimates. We have identified the items described below as our critical accounting estimates. We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use in our critical accounting estimates. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to gains or losses that could be material to our consolidated financial statements. See Note 2 of the Notes to our Consolidated Financial Statements for a discussion of these and other accounting policies.
Impairment Assessment of Goodwill and Other Indefinite Lived Intangible Assets
We conduct tests for impairment of our goodwill and our other indefinite lived intangible assets annually as of October 1, or more frequently if events or circumstances indicate the carrying amount may not be recoverable. We use present value and other valuation techniques to make this assessment. If the carrying amount of goodwill or an intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. For purposes of impairment testing, we assign goodwill to the reporting unit that benefits from the synergies arising from each business combination, and we also assign indefinite lived intangible assets to our reporting units.
Our reportable segments as of October 1, 2025 were:
• U.S. Refreshment Beverages (reporting units: U.S. Beverage Concentrates, U.S. Warehouse Direct, Direct Store Delivery, and GHOST)
• U.S. Coffee (reporting unit: U.S. Coffee)
• International (reporting units: Canada Beverage Concentrates, Canada Warehouse Direct, Canada Coffee, and Latin America Beverages)
For both goodwill and other indefinite lived intangible assets, we have the option to first assess qualitative factors to determine whether the fair value of either the reporting unit or indefinite lived intangible asset is "more likely than not" less than its carrying value, also known as a Step 0 analysis.
If a quantitative analysis is required:
• The impairment test for indefinite lived intangible assets encompasses calculating a fair value of an indefinite lived intangible asset and comparing the fair value to its carrying value. If the carrying value exceeds the estimated fair value, impairment is recorded.
• The impairment tests for goodwill include comparing fair value of the respective reporting unit with its carrying value, including goodwill and considering any indefinite lived intangible asset impairment charges.
As of October 1, 2025, we performed a quantitative analysis for goodwill and certain of our indefinite lived brand assets, whereby we used an income approach, or in some cases a combination of income and market based approaches, to determine the fair value of our assets, as well as an overall consideration of market capitalization and enterprise value. These types of analyses contain uncertainties because they require management to make assumptions and to apply judgment to estimate industry and economic factors and the profitability of future business strategies. These assumptions could be negatively impacted by various risks discussed in Item 1A, Risk Factors , in this Annual Report on Form 10-K.
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Critical assumptions and estimates for quantitative analyses include revenue growth and profit performance over the next five year period, based on our strategic plan, as well as an appropriate discount rate and long-term growth rate, as applicable. Our strategic plan is updated as part of our annual planning process and is reviewed and approved by management, and includes assumptions related to macroeconomic conditions, competitive activities, productivity initiatives, and available market data. Discount rates are based on a weighted average cost of equity and cost of debt, adjusted with various risk premiums. Long-term growth rates are based on the long-term inflation forecast, industry and category growth trends, and the long-term economic growth potential.
The following table provides the range of rates used in the analysis as of October 1, 2025:

Rate Minimum Maximum
Discount rates 9.5   % 12.0   %
Long-term growth rates 0.0   % 3.5   %

The following table shows the non-cash impairment charges that were recorded for goodwill and for indefinite lived brand assets for the years presented:

Year Ended December 31,
(in millions) 2025 2024 2023
Goodwill (1)
$ —   $ 306  $ — 
Indefinite lived brand assets (2)
78   412  — 

(1) Goodwill attributed to the U.S. WD reporting units was impaired during the year ended December 31, 2024.
(2) Indefinite lived brand assets were impaired during the years ended December 31, 2025 and 2024 to bring the respective carrying values equal to their fair values.
Sensitivity Analysis - Discount Rate
For goodwill, holding all other assumptions in the analysis constant, including the revenue and profit performance assumption, the effect of a 0.50% increase in the discount rate used to determine the fair value of the reporting units as of October 1, 2025, would not result in any impairment charges on any of our reporting units.
For the indefinite lived priority brand assets quantitatively assessed, holding all other assumptions in the analysis constant, including the revenue and profit performance assumption, the effect of a 0.50% increase in the discount rate used to determine the fair value of those assets as of October 1, 2025, would impact the amount of headroom over the carrying value of those assets as follows:

(in millions) Selected Discount Rate Discount Rate Increase of 0.50%
Headroom Percentage Carrying Value Fair Value Carrying Value Fair Value

0% (1)
$ 1,110   $ 1,110   $ 2,560   $ 2,430  
Less than 25% 2,847   3,110   1,397   1,540  
25 - 50% 314   440   3,798   5,360  
In excess of 50% 15,639   29,280   12,155   22,570  

(1) Carrying value at the selected discount rate reflects the results of the annual impairment analysis recognized during the year ended December 31, 2025.
Sensitivity Analysis - Long-Term Growth Rate
For goodwill, holding all other assumptions in the analysis constant, including the discrete period revenue and profit performance assumptions as well as the discount rates, the effect of a 0.50% decrease in the long-term growth rate used to determine the fair value of the reporting units as of October 1, 2025, would not result in any impairment charges on any of our reporting units.
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For the indefinite lived priority brand assets quantitatively assessed, holding all other assumptions in the analysis constant, including the discrete period revenue and profit performance assumptions as well as the discount rates, the effect of a 0.50% decrease in the long-term revenue growth rate used to determine the fair value of those assets as of October 1, 2025, would impact the amount of headroom over the carrying value of those assets as follows:

(in millions) Selected Long-Term Growth Rate Long-Term Growth Rate
 Decrease of 0.50%
Headroom Percentage Carrying Value Fair Value Carrying Value Fair Value

0% (1)
$ 1,110   $ 1,110   $ 2,560   $ 2,480  
Less than 25% 2,847   3,110   1,397   1,550  
25 - 50% 314   440   3,798   5,460  
In excess of 50% 15,639   29,280   12,155   22,930  

(1) Carrying value at the selected long-term growth rate reflects the results of the annual impairment analysis recognized during the year ended December 31, 2025.
Refer to Note 6 of the Notes to our Consolidated Financial Statements for additional information about our impairment assessments.
Revenue Recognition
We recognize revenue when performance obligations under the terms of a contract with the customer are satisfied. Accruals for customer incentives, sales returns, and marketing programs are established for the expected payout based on contractual terms, volume-based metrics, and/or historical trends.
Our customer incentives, sales returns, and marketing accrual methodology contains uncertainties because it requires management to make assumptions and to apply judgment regarding our contractual terms in order to estimate our customer participation and volume performance levels which impact the revenue recognition. Our estimates are based primarily on a combination of known or historical transaction experiences. Differences between estimated revenue and actual revenue are normally insignificant and are recognized into earnings in the period differences are determined.
Additionally, judgment is required to ensure the classification of the spend is correctly recorded as either a reduction from gross sales or advertising and marketing expense, which is a component of our SG&A expenses.
A 10% change in the accrual for our customer incentives, sales returns, and marketing programs would have affected our income from operations by $53 million for the year ended December 31, 2025.
Income Taxes
We establish income tax liabilities to remove some or all of the income tax benefit of any of our income tax positions based upon one of the following:
• the tax position is not "more likely than not" to be sustained,
• the tax position is "more likely than not" to be sustained, but for a lesser amount, or
• the tax position is "more likely than not" to be sustained, but not in the financial period in which the tax position was originally taken.
Our liability for uncertain tax positions contains uncertainties because management is required to make assumptions and to apply judgment to estimate the exposures associated with our various tax positions.
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Our income tax returns, like those of most companies, are periodically audited by domestic and foreign tax authorities. These audits include questions regarding our tax positions, including the timing and amount of deductions and the allocation of income among various tax jurisdictions. As these audits progress, events may occur that cause us to change our liability for uncertain tax positions. To the extent we prevail in matters for which a liability for uncertain tax positions has been established, or are required to pay amounts in excess of our established liability, our effective tax rate in a given financial statement period could be materially affected. An unfavorable tax settlement generally would require use of our cash and may result in an increase in our effective tax rate in the period of resolution. A favorable tax settlement may be recognized as a reduction in our effective tax rate in the period of resolution.
Business Combinations
We record acquisitions using the purchase method of accounting. All of the assets acquired and liabilities assumed are recorded at fair value as of the acquisition date. The excess of the purchase price over the estimated fair values of the net tangible and intangible assets acquired is recorded as goodwill.
The application of the purchase method of accounting for business combinations requires management to make significant estimates and assumptions in the determination of the fair value of assets acquired and liabilities assumed, in order to properly allocate purchase price consideration between assets that are depreciated and amortized from goodwill. The fair value assigned to tangible and intangible assets acquired and liabilities assumed are based on management's estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. Significant assumptions and estimates include the cash flows that an asset is expected to generate in the future, the appropriate weighted-average cost of capital, and the cost savings expected to be derived from acquiring an asset, if applicable.
Further, certain of our acquisitions may include other forms of consideration, including mandatorily redeemable liabilities and other earn-out arrangements. As of the acquisition date, we record such consideration, as applicable, at the estimated fair value of the expected future payments associated with the obligation. Any changes to the recorded fair value of the consideration are recognized in earnings in the period in which they occur.
If the actual results differ from the estimates and judgments used in these estimates, the amounts recorded in the financial statements may be exposed to potential impairment of the intangible assets and goodwill, as discussed in Impairment Assessment of Goodwill and Other Indefinite Lived Intangible Assets above.
Impairment Assessment of Equity Method Investments Without Readily Determinable Fair Values
Equity method investments are reviewed quarterly to determine whether a significant event or change in circumstances has occurred that may have an adverse effect on the fair value of each investment. When such events or changes occur, we evaluate the fair value compared to our carrying value of the investment. For investments in non-publicly traded companies, management's assessment of fair value is based on various valuation methodologies, including the option pricing model when the investment is in a preferred class of security, discounted cash flows, market multiples, and the impact of our contractual terms with the investee, as appropriate. We consider the assumptions that we believe a market participant would use in evaluating estimated future cash flows when employing the discounted cash flow methodologies. The ability to accurately predict future cash flows, especially in emerging and developing markets, may impact the determination of fair value. In the event the fair value of an investment declines below our carrying value, management is required to determine if the decline in fair value is other than temporary. If management determines the decline is other than temporary, an impairment charge is recorded.
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Investments in Variable Interest Entities
We hold equity investments in entities that are considered VIEs, including Nutrabolt and Chobani. We would be required to consolidate a VIE for which we are determined to be the primary beneficiary. To determine if we are the primary beneficiary of a VIE, we assess specific criteria and use judgment when determining if we have the power to direct the significant activities of the VIE and the obligation to absorb losses or receive benefits from the VIE that may be significant to the VIE. Factors considered include risk and reward sharing, voting rights, involvement in day-to-day capital and operating decisions, representation on a VIE's governance structure, existence of unilateral kick-out rights exclusive of protective rights or voting rights, and level of economic disproportionality between us and the VIE's other partner(s).
We have determined that we are not the primary beneficiary of any VIEs. Refer to Note 19 of the Notes to our Consolidated Financial Statements for additional information on our investments in VIEs.

EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS
Refer to Note 2 of the Notes to our Consolidated Financial Statements for a discussion of recently issued accounting standards and recently adopted provisions of U.S. GAAP .

SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION
The Notes are fully and unconditionally guaranteed by certain of our direct and indirect subsidiaries (the "Guarantors"), as defined in the indentures governing the Notes. The Guarantors are 100% owned either directly or indirectly by us and jointly and severally guarantee, subject to the release provisions described below, our obligations under the Notes. None of our subsidiaries organized outside of the U.S., any of the subsidiaries held by Maple Parent Holdings Corp. prior to the DPS Merger, or any of the subsidiaries acquired after the DPS Merger (collectively, the "Non-Guarantors") guarantee the Notes. The subsidiary guarantees with respect to the Notes are subject to release upon the occurrence of certain events, including the sale of all or substantially all of a subsidiary's assets, the release of the subsidiary's guarantee of our other indebtedness, our exercise of the legal defeasance option with respect to the Notes, and the discharge of our obligations under the applicable indenture.
The following schedules present the summarized financial information for Keurig Dr Pepper Inc. (the "Parent") and the Guarantors on a combined basis after intercompany eliminations; the Parent and the Guarantors' amounts due from and amounts due to Non-Guarantors are disclosed separately. The consolidating schedules are provided in accordance with the reporting requirements of Rule 13-01 under SEC Regulation S-X for the issuer and guarantor subsidiaries.
The summarized financial information for the Parent and Guarantors were as follows:

(in millions) For the Year Ended December 31, 2025
Net sales $ 10,515  
Gross profit 5,339  
Income from operations 1,523  
Net income 2,094  

December 31,
(in millions) 2025 2024
Current assets $ 2,964   $ 2,373 
Non-current assets 51,756   49,827 
Total assets (1)
$ 54,720   $ 52,200 

Current liabilities $ 6,926   $ 6,101 
Non-current liabilities 21,390   20,984 
Total liabilities (2)
$ 28,316   $ 27,085 

(1) Includes $8 million and $115 million of intercompany receivables due to the Parent and Guarantors from the Non-Guarantors as of December 31, 2025 and December 31, 2024, respectively.
(2) Includes $2,610 million and $1,997 million of intercompany payables due to the Non-Guarantors from the Parent and Guarantors as of December 31, 2025 and December 31, 2024, respectively.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risks arising from changes in market rates and prices, including movements in foreign currency exchange rates, interest rates, and commodity prices. We regularly enter into derivatives or other financial instruments to hedge or mitigate commercial risks. We do not enter into derivative instruments for speculative purposes. Refer to Note 7 of the Notes to our Consolidated Financial Statements for further information about our derivative instruments.
FOREIGN EXCHANGE RISK
The majority of our net sales, expenses, and capital purchases are transacted in U.S. dollars. However, we have exposure with respect to foreign exchange rate fluctuations. Our primary exposure to foreign exchange rates is the Canadian dollar, the Mexican peso, and the Euro against the U.S. dollar, including significant anticipated Euro-denominated cash outflows resulting from the intended JDE Peet's Acquisition. Exchange rate gains or losses related to foreign currency transactions are recognized as transaction gains or losses in earnings as incurred.
We use derivative instruments such as foreign exchange forward contracts to manage a portion of our exposure to changes in foreign exchange rates. As of December 31, 2025, we had derivative contracts outstanding with notional values of $13,033 million, including approximately $11,810 million of forward contracts associated with the planned JDE Peet's Acquisition. These contracts mature at various dates through June 2027. The fair value of foreign currency derivatives that qualify for hedge accounting resulted in a net unrealized loss of $13 million as of December 31, 2025, and the impact of a 10% weakening in the U.S. dollar is estimated to decrease the fair value by approximately $68 million. The fair value of foreign currency derivatives that do not qualify for hedge accounting resulted in a net unrealized loss of $40 million as of December 31, 2025, and the impact of a 10% weakening in the U.S. dollar is estimated to increase the fair value by approximately $1,248 million. Any increase or decrease in the value of the foreign currency derivatives would have an approximately offsetting change in the underlying hedged risk.
INTEREST RATE RISK
We centrally manage our debt portfolio through the use of interest rate contracts and monitor our mix of fixed-rate and variable-rate debt. As of December 31, 2025, the face value of our fixed-rate debt, excluding lease obligations, was $13,214 million, and our variable-rate debt was $3,060 million, inclusive of commercial paper. From time to time, we also enter into interest rate contracts that effectively result in variable-rate interest payments or receipts. These derivative instruments are generally based on SOFR and a credit spread. As of December 31, 2025, we had derivative contracts outstanding with aggregate notional value of $3.8 billion, $1.5 billion of which relate to planned future issuances of long-term debt, and maturing at various dates through November 2046.
We estimate that the potential impact to our interest rate expense associated with variable rate interest payments resulting from a hypothetical interest rate change of 1%, based on amounts outstanding as of December 31, 2025, would be an increase or decrease of approximately $69 million.
COMMODITY RISK
We are subject to market risks with respect to commodities because our ability to recover increased costs through higher pricing may be limited by the competitive environment in which we operate. Our principal commodities risks relate to our purchases of coffee beans, PET, Polypropylene, aluminum, diesel fuel, corn (for high fructose corn syrup), apple juice concentrate, sucrose, and natural gas (for use in processing and packaging).
We utilize commodities derivative instruments and supplier pricing agreements to hedge the risk of movements in commodity prices for limited time periods for certain commodities. As of December 31, 2025, we had derivative contracts outstanding with a notional value of $595 million maturing at various dates through January 2028. The fair market value of these contracts as of December 31, 2025 was a net asset of $18 million. As of December 31, 2025, a 10% change (up or down) in commodity prices is estimated to increase or decrease the fair value of these derivative instruments by approximately $60 million. Any change in the value of the commodities derivatives instruments would have an approximately offsetting change in the underlying hedged risk.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Page Number
Consolidated Statements of Income
51

Consolidated Statements of Comprehensive Income
52

Consolidated Balance Sheets
53

Consolidated Statements of Cash Flows
54

Consolidated Statements of Changes in Stockholders' Equity
56

Notes to Consolidated Financial Statements
57

1. Business and Basis of Presentation
57

2. Significant Accounting Policies
58

3. JDE Peet's Acquisition and Related Transactions
70

4. Other Acquisitions
71

5. Long-Term Obligations and Borrowing Arrangements
73

6. Goodwill and Intangible Assets
77

7. Derivatives
80

8. Leases
83

9. Segments
85

10. Net Sales
88

11. Earnings per Share
88

1 2 . Employee Benefit Plans
89

1 3 . Stock-Based Compensation
93

1 4 . Equity Method Investments
95

1 5 . Income Taxes
95

16. Accumulated Other Comprehensive Income (Loss)
99

1 7 . Property, Plant, and Equipment
100

1 8 . Commitments and Contingencies
101

19. Transactions with Variable Interest Entities
102

2 0 . Restructuring
104

2 1 . Related Parties
105

2 2 . Subsequent Events
106

Reports of Independent Registered Accounting Firm (PCAOB ID No. 34 )
107

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KEURIG DR PEPPER INC.
CONSOLIDATED STATEMENTS OF INCOME

Year Ended December 31,
(in millions, except per share data) 2025 2024 2023
Net sales $ 16,603   $ 15,351   $ 14,814  
Cost of sales 7,604   6,822   6,734  
Gross profit 8,999   8,529   8,080  
Selling, general, and administrative expenses 5,351   5,013   4,912  
Impairment of goodwill —   306   —  
Impairment of intangible assets 78   412   2  

Other operating (income) expense, net ( 5 ) 207   ( 26 )
Income from operations 3,575   2,591   3,192  
Interest expense, net 754   735   496  

Other expense (income), net 134   ( 58 ) ( 61 )
Income before provision for income taxes 2,687   1,914   2,757  
Provision for income taxes 608   473   576  
Net income $ 2,079   $ 1,441   $ 2,181  

Earnings per common share:      
Basic $ 1.53   $ 1.06   $ 1.56  
Diluted 1.53   1.05   1.55  
Weighted average common shares outstanding:
Basic 1,358.1   1,362.2   1,399.3  
Diluted 1,362.8   1,368.3   1,408.4  

The accompanying notes are an integral part of these consolidated financial statements.
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KEURIG DR PEPPER INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Year Ended December 31,
(in millions) 2025 2024 2023
Net income $ 2,079   $ 1,441   $ 2,181  
Other comprehensive income
Foreign currency translation adjustments 401   ( 612 ) 288  
Net change in pension and post-retirement liability, net of tax of $ 0 , $ 0 , and $ 2 , respectively
( 2 ) —   ( 4 )
Net change in cash flow hedges, net of tax of $ 13 , $( 24 ), and $ 29 , respectively
( 21 ) 21   ( 98 )
Total other comprehensive income (loss) 378   ( 591 ) 186  
Comprehensive income 2,457   850   2,367  

The accompanying notes are an integral part of these consolidated financial statements.
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KEURIG DR PEPPER INC.
CONSOLIDATED BALANCE SHEETS

  December 31,
(in millions, except share and per share data) 2025 2024
Assets
Current assets:    
Cash and cash equivalents $ 1,026   $ 510  
Restricted cash and restricted cash equivalents 18   80  
Trade accounts receivable, net 1,671   1,502  
Inventories 1,733   1,299  
Prepaid expenses and other current assets 818   606  
Total current assets 5,266   3,997  
Property, plant, and equipment, net 3,230   2,964  
Equity method investments 1,660   1,543  
Goodwill 20,247   20,053  
Intangible assets, net 23,725   23,634  
Deferred tax assets 36   39  
Other non-current assets 1,295   1,200  
Total assets $ 55,459   $ 53,430  
Liabilities and Stockholders' Equity
Current liabilities:    
Accounts payable $ 2,996   $ 2,985  
Accrued expenses 1,379   1,584  
Structured payables 25   41  
Short-term borrowings and current portion of long-term obligations 3,105   2,642  
Other current liabilities 785   835  
Total current liabilities 8,290   8,087  
Long-term obligations 13,036   12,912  
Deferred tax liabilities 5,526   5,435  
Other non-current liabilities 3,091   2,753  
Total liabilities 29,943   29,187  

Stockholders' equity:    
Preferred stock, $ 0.01 par value, 15,000,000 shares authorized, no shares issued as of December 31, 2025 and 2024
—   —  
Common stock, $ 0.01 par value, 2,000,000,000 shares authorized, 1,358,663,795 and 1,356,664,609 shares issued and outstanding as of December 31, 2025 and 2024, respectively
14   14  
Additional paid-in capital 19,778   19,712  
Retained earnings 5,622   4,793  
Accumulated other comprehensive income (loss) 102   ( 276 )
Total stockholders' equity 25,516   24,243  

Total liabilities and stockholders' equity $ 55,459   $ 53,430  

The accompanying notes are an integral part of these consolidated financial statements.
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KEURIG DR PEPPER INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31,
(in millions) 2025 2024 2023
Operating activities:
Net income $ 2,079   $ 1,441   $ 2,181  
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense 455   422   402  
Amortization of intangibles 138   133   137  
Other amortization expense 160   178   181  
Provision for sales returns 60   70   61  
Deferred income taxes 45   ( 254 ) ( 4 )
Employee stock-based compensation expense 97   98   116  

(Gain) loss on disposal of property, plant, and equipment ( 2 ) 16   ( 1 )
Unrealized (gain) loss on foreign currency ( 6 ) 33   ( 13 )
Unrealized (gain) loss on derivatives ( 1 ) 91   31  
Settlements of interest rate contracts —   —   54  
Earnings of equity method investments ( 81 ) ( 42 ) ( 33 )
Earned equity from distribution arrangements ( 54 ) ( 94 ) ( 44 )
Impairment of goodwill —   306   —  
Impairment of intangible assets 78   412   2  

Other, net 26   —   6  
Changes in assets and liabilities, excluding the effects of business acquisitions:
Trade accounts receivable ( 202 ) ( 209 ) 70  
Inventories ( 405 ) ( 92 ) 182  
Income taxes receivable and payable, net ( 141 ) 133   ( 199 )
Other current and non-current assets ( 216 ) ( 227 ) ( 192 )
Accounts payable and accrued expenses ( 212 ) ( 196 ) ( 1,618 )
Other current and non-current liabilities 173   —   10  
Net change in operating assets and liabilities ( 1,003 ) ( 591 ) ( 1,747 )
Net cash provided by operating activities 1,991   2,219   1,329  
Investing activities:
Acquisitions of businesses, net of cash acquired ( 149 ) ( 1,000 ) —  

Purchases of property, plant, and equipment ( 486 ) ( 563 ) ( 425 )
Proceeds from sales of property, plant, and equipment 14   4   9  
Purchases of intangibles ( 17 ) ( 59 ) ( 56 )
Investments in equity method investments ( 1 ) ( 7 ) ( 316 )

Other, net 66   11   4  
Net cash used in investing activities $ ( 573 ) $ ( 1,614 ) $ ( 784 )

The accompanying notes are an integral part of these consolidated financial statements.
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KEURIG DR PEPPER INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)

Year Ended December 31,
(in millions) 2025 2024 2023
Financing activities:
Proceeds from issuance of Notes $ 2,000   $ 3,000   $ —  
Repayments of Notes ( 1,029 ) ( 1,150 ) ( 500 )
Net issuance (repayment) of commercial paper 594   ( 480 ) 1,697  
Proceeds from term loan —   990   —  
Repayment of term loan ( 990 ) —   —  
Proceeds from structured payables 31   49   130  
Repayments of structured payables ( 47 ) ( 129 ) ( 148 )
Cash dividends paid ( 1,250 ) ( 1,194 ) ( 1,142 )
Repurchases of common stock, inclusive of excise tax obligation ( 9 ) ( 1,110 ) ( 706 )

Tax withholdings related to net share settlements ( 31 ) ( 61 ) ( 62 )
Payments on finance leases ( 129 ) ( 115 ) ( 95 )
Deferred financing charges paid ( 134 ) ( 16 ) —  
Other, net ( 5 ) ( 7 ) ( 6 )
Net cash used in financing activities ( 999 ) ( 223 ) ( 832 )
Cash, cash equivalents, restricted cash, and restricted cash equivalents:
Net change from operating, investing, and financing activities 419   382   ( 287 )
Effect of exchange rate changes 17   ( 41 ) 19  
Beginning balance 608   267   535  
Ending balance $ 1,044   $ 608   $ 267  

Supplemental cash flow disclosures of non-cash investing and financing activities:
Capital expenditures included in accounts payable and accrued expenses $ 204   $ 220   $ 276  

Acquisitions of businesses —   98   —  

Dividends declared but not yet paid 312   312   299  
Mandatory redemption liability at acquisition —   689   —  

Supplemental cash flow disclosures:
Cash paid for interest 594   494   443  

The accompanying notes are an integral part of these consolidated financial statements.
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KEURIG DR PEPPER INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

  Common Stock Issued  Additional
Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total
Stockholders' Equity Non-Controlling Interest Total Equity
(in millions, except per share data) Shares Amount
Balance as of December 31, 2022
1,408.4 $ 14   $ 21,444   $ 3,539   $ 129   $ 25,126   $ ( 1 ) $ 25,125  

Net income —  —  —  2,181   —  2,181   —  2,181  
Other comprehensive income —  —  —  —  186   186   —  186  

Dividends declared, $ 0.83 per share
—  —  —  ( 1,160 ) —  ( 1,160 ) —  ( 1,160 )
Repurchases of common stock, inclusive of excise tax obligation ( 21.7 ) —  ( 711 ) —  —  ( 711 ) —  ( 711 )

Shares issued under employee stock-based compensation plans and other 3.7   —  —  —  —  —  —  — 
Tax withholdings related to net share settlements —  —  ( 62 ) —  —  ( 62 ) —  ( 62 )
Stock-based compensation and stock options exercised —  —  117   —  —  117   —  117  
Non-controlling interest surrender of shares —  —  —  ( 1 ) —  ( 1 ) 1   — 
Balance as of December 31, 2023
1,390.4   14   20,788   4,559   315   25,676   —   25,676  
Net income —  —  —  1,441   —  1,441   —  1,441  
Other comprehensive loss —  —  —  —  ( 591 ) ( 591 ) —  ( 591 )

Dividends declared, $ 0.89 per share
—  —  —  ( 1,207 ) —  ( 1,207 ) —  ( 1,207 )
Repurchases of common stock, inclusive of excise tax obligation ( 38.0 ) —  ( 1,114 ) —  —  ( 1,114 ) —  ( 1,114 )

Shares issued under employee stock-based compensation plans and other 4.3   —  —  —  —  —  —  — 
Tax withholdings related to net share settlements —  —  ( 61 ) —  —  ( 61 ) —  ( 61 )
Stock-based compensation and stock options exercised —  —  99   —  —  99   —  99  

Balance as of December 31, 2024
1,356.7   14   19,712   4,793   ( 276 ) 24,243   —   24,243  
Net income —   —   —   2,079   —   2,079   —   2,079  
Other comprehensive income —   —   —   —   378   378   —   378  

Dividends declared, $ 0.92 per share
—   —   —   ( 1,250 ) —   ( 1,250 ) —   ( 1,250 )

Shares issued under employee stock-based compensation plans and other 2.0   —   —   —   —   —   —   —  
Tax withholdings related to net share settlements —   —   ( 31 ) —   —   ( 31 ) —   ( 31 )
Stock-based compensation
—   —   97   —   —   97   —   97  

Balance as of December 31, 2025
1,358.7   $ 14   $ 19,778   $ 5,622   $ 102   $ 25,516   $ —   $ 25,516  

The accompanying notes are an integral part of these consolidated financial statements.
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KEURIG DR PEPPER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Business and Basis of Presentation
ORGANIZATION AND NATURE OF OPERATIONS
Keurig Dr Pepper Inc. is a leading coffee and beverage company in North America that manufactures, markets, distributes, and sells hot and cold beverages and single serve brewing systems.
References in this Annual Report on Form 10-K to "KDP", "we", "us", and "our" refer to Keurig Dr Pepper Inc. and all wholly-owned subsidiaries included in the consolidated financial statements. Definitions of terms used in this Annual Report on Form 10-K are included within the Master Glossary.
This Annual Report on Form 10-K refers to some of our owned or licensed trademarks, trade names, and service marks, which are referred to as our brands. All of the product names included herein are either KDP registered trademarks or those of our licensors.
BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP.
FISCAL YEAR END
Our fiscal year end is December 31, and our interim fiscal quarters are March 31, June 30, and September 30. One of our significant subsidiaries, Maple Parent Holdings Corp., has a fiscal year end of the last Saturday in December, and its interim fiscal quarters end every thirteenth Saturday. The fiscal year for Maple Parent Holdings Corp. includes 52 weeks for the years ended December 31, 2025, 2024, and 2023. We do not adjust for the difference in fiscal year, as the difference is within the range permitted by the Exchange Act.
PRINCIPLES OF CONSOLIDATION
We consolidate all wholly owned subsidiaries.
We consolidate investments in companies in which we hold the majority interest. In these cases, the third-party equity interest is referred to as non-controlling interest. Generally, non-controlling interests are presented as a separate component within equity in the Consolidated Balance Sheets, and net earnings attributable to the non-controlling interests are presented separately in the Consolidated Statements of Income. However, if the investment agreement contains a mandatorily redeemable financial instrument for the non-controlling interests, such mandatorily redeemable interests are recorded as a liability, rather than equity, in the Consolidated Balance Sheets, and no earnings are attributable to the non-controlling interests.
We would be required to consolidate VIEs for which we have been determined to be the primary beneficiary. To determine if we are the primary beneficiary, we assess specific criteria and use judgment when determining if we have the power to direct the significant activities of the VIE and the obligation to absorb losses or receive benefits from the VIE that may be significant to the VIE. Factors considered include risk and reward sharing, voting rights, involvement in day-to-day capital and operating decisions, representation on a VIE's governance structure, existence of unilateral kick-out rights exclusive of protective rights or voting rights, and level of economic disproportionality between us and the VIE's other partner(s). We have determined that we are not the primary beneficiary of any VIEs. However, future events may require us to consolidate VIEs if we become the primary beneficiary.
We use the equity method to account for investments in companies if the investment provides us with the ability to exercise significant influence over operating and financial policies of the investee. Consolidated net income includes our proportionate share of the net income or loss of these companies. Judgment regarding the level of influence over each equity method investment includes considering key factors such as ownership interest, representation on the Board or similar governing body, participation in policy-making decisions, and material intercompany transactions.
We eliminate from our financial results all intercompany transactions between entities included in the consolidated financial statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

RECLASSIFICATIONS
We reclassified certain current and prior period amounts within the Consolidated Statements of Income and Consolidated Statements of Cash Flows in order to conform to current year presentation. These reclassifications had no impact on our net income or total cash, cash equivalents, restricted cash, and restricted cash equivalents, respectively.

2. Significant Accounting Policies
USE OF ESTIMATES
The process of preparing our consolidated financial statements in conformity with U.S. GAAP requires the use of estimates and judgments that affect reported amounts. These estimates and judgments are based on historical experience, future expectations, and other factors and assumptions we believe to be reasonable under the circumstances. These estimates and judgments are reviewed on an ongoing basis and are revised when necessary. Changes in estimates are recorded in the period of change. Actual amounts may differ from these estimates.
SIGNIFICANT ACCOUNTING POLICIES
Fair Value
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Based upon the transparency of inputs to the valuation of an asset or liability, a three-level hierarchy has been established for fair value measurements. The three-level hierarchy for disclosure of fair value measurements is as follows:
Level 1 - Quoted market prices in active markets for identical assets or liabilities.
Level 2 - Observable inputs such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.
Level 3 - Valuations with one or more unobservable significant inputs that reflect the reporting entity's own assumptions.
The fair value of Notes and marketable securities as of December 31, 2025 and 2024 are based on quoted market prices for publicly traded securities.
We estimate fair values of financial instruments measured at fair value in the consolidated financial statements on a recurring basis to ensure they are calculated based on market rates to settle the instruments. These values represent the estimated amounts we would pay or receive to terminate agreements, taking into consideration current market rates and creditworthiness.
The mandatory redemption liability for GHOST is a liability measured on a recurring basis that is considered Level 3 within the fair value hierarchy. Refer to the Mandatory Redemption Liability section below for further information.
Transfers between levels are recognized at the end of each reporting period. There were no transfers of financial instruments between the levels of fair value hierarchy during the years ended December 31, 2025, 2024, and 2023.
Acquisitions
We evaluate the facts and circumstances of each acquisition to determine whether the transaction should be accounted for as an asset acquisition or a business combination.
Asset Acquisitions
When substantially all of the fair value of the assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the transaction is accounted for as an asset acquisition. Direct transaction costs associated with asset acquisitions are capitalized.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

Business Combinations
We include the results of operations of the acquired business in the consolidated financial statements prospectively from the acquisition date. We allocate the purchase consideration to the assets acquired and liabilities assumed in the acquired entity generally based on their fair values at the acquisition date. The excess of the fair value of purchase consideration over the fair value of these assets acquired and liabilities assumed in the acquired entity is recorded as goodwill. During the measurement period, we will continue to obtain information to assist in determining the fair value of net assets acquired, which may differ from these preliminary estimates. Measurement period adjustments, if applicable, will be applied in the reporting period in which the adjustment amounts are determined. Certain of our acquisitions may include other forms of consideration, including mandatorily redeemable liabilities and other earn-out arrangements. As of the acquisition date, we record such consideration, as applicable, at the estimated fair value of the expected future payments associated with the obligation. Any changes to the recorded fair value of the consideration are recognized in earnings in the period in which they occur.
Transaction expenses are recognized separately from the business combination and are expensed as incurred. These charges primarily include direct third-party professional fees for advisory and consulting services and other incremental costs related to the acquisition.
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents
Cash and cash equivalents include cash and investments in short-term, highly liquid securities, with original maturities of three months or less.
We are exposed to potential risks associated with its cash and cash equivalents. We place our cash and cash equivalents with high credit quality financial institutions. Deposits with these financial institutions may exceed the amount of insurance provided; however, these deposits typically are redeemable upon demand and, therefore, we believe the financial risks associated with these financial instruments are minimal.
The carrying value of cash, cash equivalents, restricted cash, and restricted cash equivalents is valued as of the balance sheet date equating fair value and is classified as Level 1. The following table provides a reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents reported with the Consolidated Balance Sheets to the total of the same amounts shown in the Consolidated Statements of Cash Flows:

December 31,
(in millions) 2025 2024
Cash and cash equivalents $ 1,026   $ 510  
Restricted cash and restricted cash equivalents (1)
18   80  
Non-current restricted cash and restricted cash equivalents (2)
—   18  
Total cash, cash equivalents, restricted cash, and restricted cash equivalents $ 1,044   $ 608  

(1) Restricted cash and restricted cash equivalents consists primarily of amounts held in escrow in connection with the acquisition of GHOST as of December 31, 2025 and 2024, as well as Kalil Acquisition as of December 31, 2024, with a corresponding holdback liability recorded in Other current liabilities. Refer to Note 4 for additional information.
(2) Non-current restricted cash and restricted cash equivalents, reported within Other non-current assets in the Consolidated Balance Sheets, consists of amounts held in escrow in connection with the acquisition of GHOST as of December 31, 2024, with a corresponding holdback liability recorded in Other non-current liabilities. Refer to Note 4 for additional information .
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

Trade Accounts Receivable and Allowance for Expected Credit Losses
Trade accounts receivable are recorded at the invoiced amount and do not bear interest.
We are exposed to potential credit risks associated with our accounts receivable, as we generally do not require collateral on our accounts receivable. We determine the required allowance for expected credit losses using information such as customer credit history and financial condition, industry and market segment information, credit reports, and economic trends and conditions. Allowances can be affected by changes in the industry, customer credit issues, or customer bankruptcies, or expectations of any such events in a future period when reasonable and supportable. Historical information is utilized beyond reasonable and supportable forecast periods. Amounts are charged against the allowance when it is determined that expected credit losses may occur. Activity in the allowance for expected credit loss accounts was not significant for the years ended December 31, 2025, 2024, and 2023.
Concentration of credit risk with respect to accounts receivable is limited due to the large number of customers in various channels comprising our customer base. Walmart is a major customer as described in Note 9. As of December 31, 2025 and 2024, Walmart accounted for approximatel y $ 186 million and $ 205 million of trade receivables, respectively, which exceeded 10% of our total trade accounts receivabl e.
Inventories
Inventories consist of raw materials, WIP, and finished goods. Raw materials include various commodity costs for our ingredients and materials sourced from various providers. The costs of finished goods inventories manufactured by us include raw materials, direct labor, and indirect production and overhead costs. Finished goods also include the purchases of brewing systems and certain beverages from third-party manufacturers. Inventories are stated at the lower of cost or net realizable value. Cost is measured using standard cost, which approximates first-in, first-out. We make a djustments for excess and obsolete inventories based on an assessment of slow-moving and obsolete inventories, determined by historical usage and demand.
The following table summarizes our inventories:

  December 31,
(in millions) 2025 2024
Raw materials $ 706   $ 520  
WIP 8   9  
Finished goods 1,019   770  
Total $ 1,733   $ 1,299  

Property, Plant, and Equipment, Net
Property, plant, and equipment is stated at cost plus capitalized interest on borrowings during the actual construction period of major capital projects, net of accumulated depreciation. Significant improvements which substantially extend the useful lives of assets are capitalized, and expenditures for repairs and maintenance which do not improve or extend the life of the assets are expensed as incurred. We capitalize certain computer software and software development costs incurred in connection with developing or obtaining computer software for internal use, which are included in property, plant, and equipment. When property, plant, and equipment is sold, the costs and the related accumulated depreciation are removed from the accounts, and any net gain or loss is recorded in Other operating (income) expense, net in the Consolidated Statements of Income.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

For financial reporting purposes, depreciation is computed on the straight-line method over the estimated useful asset lives as follows:  

Type of Asset Useful Life
Buildings and improvements 3 to 40 years
Machinery and equipment 2 to 20 years
Cold drink equipment 2 to 7 years
Computer software 2 to 8 years

Leasehold improvements, which are primarily considered building improvements, are depreciated over the shorter of the estimated useful life of the assets or the lease term. Estimated useful lives are periodically reviewed and, when warranted, are updated.
We periodically review long-lived assets for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. In order to assess recoverability, we compare the estimated undiscounted future pre-tax cash flows from the use of the group of assets, as defined, to the carrying amount of such assets. Measurement of an impairment loss is based on the excess of the carrying amount of the group of assets over the long-lived asset's fair value, and any impairment loss i s recorded in Other operating (income) expense, net, in the Consolidated Statements of Income . For the years ended December 31, 2025, 2024, and 2023, no impairment loss was recorded related to these assets.
Leases
We lease certain facilities and machinery and equipment, including fleet. These leases expire at various dates through 2044. Some lease agreements contain standard renewal provisions that allow us to renew the lease at rates equivalent to fair market value at the end of the lease term. Our lease agreements do not contain any material restrictive covenants. Certain leases with VIEs, which include manufacturing and distribution properties and our Frisco headquarters, contain an RVG at the end of the term. Refer to Note 19 for additional information about RVGs.
Operating leases are included within Other non-current assets, Other current liabilities, and Other non-current liabilities within the Consolidated Balance Sheets. Finance leases are included within Property, plant, and equipment, net, Other current liabilities, and Other non-current liabilities. Leases with an initial term of 12 months or less are not recognized in the Consolidated Balance Sheets.
Right of use assets and lease liabilities are recognized in the Consolidated Balance Sheets at the present value of future minimum lease payments over the lease term on the commencement date. When the rate implicit in the lease is not provided to us, we use our incremental borrowing rate based on information available at the commencement date to determine the present value of future minimum lease payments. Our incremental borrowing rate is determined using a portfolio of secured borrowing rates commensurate with the term of the lease and is reassessed on a quarterly basis.
We have lease agreements with lease and non-lease components, which are generally accounted for as a single lease component.
Sale-and-leaseback transactions occur when we sell assets to a third-party and subsequently lease them back. The resulting leases that qualify for sale-and-leaseback accounting are evaluated and accounted for as operating leases. A transaction that does not qualify for sale-and-leaseback accounting as a result of finance lease classification or the failure to meet certain revenue recognition criteria is accounted for as a financing transaction. For a financing transaction, we retain the assets sold within Property, plant, and equipment, net and record a financing obligation equal to the amount of cash proceeds received. Rental payments under such transactions are recognized as a reduction of the financing obligation and as interest expense using an effective interest method.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

Investments
Deferred Compensation Plan
We have a U.S. non-qualified defined contribution plan. Contributions under the non-qualified defined contribution plan are maintained in a rabbi trust and are not readily available to us. The rabbi trust consists of readily marketable equity securities, which are included in Other non-current assets in the Consolidated Balance Sheets. Gains or losses from such investments are charged to Other expense (income), net in the Consolidated Statements of Income.
The corresponding deferred compensation liability is included in Other non-current liabilities in the Consolidated Balance Sheets, with changes in this obligation recognized as adjustments to compensation expense and recorded in SG&A expenses.
Investments in Other Equity Securities
We consolidate investments in companies in which we hold the majority interest. In these cases, the third-party equity interest is referred to as non-controlling interest. Generally, non-controlling interests are presented as a separate component within equity in the Consolidated Balance Sheets, and net earnings attributable to the non-controlling interests are presented separately in the Consolidated Statements of Income. However, if the investment agreement contains a mandatorily redeemable financial instrument for the non-controlling interests, such mandatorily redeemable interests are recorded as a liability, rather than equity, in the Consolidated Balance Sheets, and no earnings are attributable to the non-controlling interests.
Effective December 31, 2024, we hold a majority interest in GHOST. This investment contains a mandatorily redeemable financial instrument for the non-controlling interests. Refer to Note 4 for further information about the GHOST Transactions.
We also hold investments in certain entities which are accounted for as equity method investments, equity securities with readily determinable fair value, or equity securities without readily determinable value.
The companies over which we exert significant influence, but do not control the financial and operating decisions, are accounted for as equity method investments. Equity method investments are reported at cost, which includes third-party transaction costs, and are adjusted each period for dividends paid, if any, as well as our share of the investee's net income or loss, unless the investment agreement indicates an alternative allocation of earnings or losses. Our share of the net income or loss resulting from these investments is recorded in Other expense (income), net in the Consolidated Statements of Income. To the extent we earn additional equity in these investments from achieving certain contractual milestones in our distribution activities, the earned equity is recorded as a reduction in Cost of sales and included in the Earned equity from distribution arrangements line in the Consolidated Statements of Cash Flows. Any gains and losses resulting from the sale of these investments are recorded in Gain on sale of equity method investment. The carrying value of our equity method investments is reported in Equity method investments in the Consolidated Balance Sheets. Distributions received from equity method investments are classified using the cumulative earnings approach in the Consolidated Statements of Cash Flows.
Our equity method investments in certain privately held entities do not have readily determinable fair values and are periodically evaluated for impairment. An impairment loss would be recorded whenever a decline in value of an investment below its carrying amount is determined to be other than temporary.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

Investments with readily determinable fair values for which we do not have the ability to exercise significant influence are measured at fair value. Fair values of these equity securities are determined using quoted market prices from daily exchange traded markets, based on the closing price as of the balance sheet date, and are classified as Level 1 and reported in Other non-current assets in the Consolidated Balance Sheets. Unrealized mark-to-market gains and losses are recorded to Other expense (income), net. The following table presents the amount of unrealized mark-to-market losses (gains), net, on our Vita Coco investment recognized in the Consolidated Statements of Income related to these securities during the periods presented:

For the Year Ended December 31,
(in millions) 2025 2024 2023
Unrealized mark-to-market losses (gains) (1)
$ 32   $ ( 17 ) $ ( 16 )

(1) We sold our investment in Vita Coco and recorded a realized gain of $ 34 million in the first quarter of 2025.
Goodwill and Intangible Assets
Intangible assets are classified into two categories:
• intangible assets with definite lives subject to amortization, and
• intangible assets with indefinite lives not subject to amortization.
The majority of the intangible asset balance is made up of brands which we have determined to have indefinite useful lives. In arriving at the conclusion that a brand has an indefinite useful life, we review factors such as size, diversification, and market share of each brand. We expect to acquire, hold, and support brands for an indefinite period through consumer marketing and promotional support. We also consider factors such as our ability to continue to protect the legal rights that arise from these intangible assets indefinitely or the absence of any regulatory, economic, or competitive factors that could truncate the life of these intangible assets. If the criteria are not met, the brand is considered to have a finite useful life.
Identifiable intangible assets deemed to have determinable finite useful lives are amortized on a straight-line basis over the period of which the expected economic benefit is derived. Amortization expense is recorded in SG&A expenses i n the Consolidated Statements of Income. The estimated useful lives of intangible assets with definite lives are as follows:

Type of Asset Useful Life
Acquired technology 20 years
Brands 5 to 10 years
Contractual arrangements 10 to 20 years
Customer relationships 10 to 40 years
Distribution rights 4 to 10 years
Trade names 10 years
Other 3 to 10 years

For intangible assets with definite lives, tests for impairment are performed if conditions exist that indicate the carrying value may not be recoverable.
For goodwill and indefinite lived intangible assets, w e perform quarterly analyses to evaluate whether any triggering events have occurred which may indicate that the carrying amount of an asset may not be recoverable. We also conduct tests for impairment annually on the first day of the fourth quarter, or more frequently if events or circumstances indicate the carrying amount may not be recoverable.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

For both goodwill and other indefinite lived intangible assets, we have the option to first assess qualitative factors to determine whether the fair value of either the reporting unit or indefinite lived intangible asset is "more likely than not" less than its carrying value, also known as a Step 0 analysis. When performing a quantitative, or Step 1, analysis, we use the income approach, or in some cases a combination of income and market based approaches, to determine the fair value of our assets, as well as an overall consideration of market capitalization and enterprise value.
The tests for impairment include significant judgment in estimating the fair value of reporting units and intangible assets. Management's estimates of fair value, which fall under Level 3 and are non-recurring, are based on historical and forecasted revenues and profit performance and discount rates. Fair value is based on what the reporting units and intangible assets would be worth to a third-party market participant. Discount rates are based on a weighted average cost of equity and cost of debt, adjusted with various risk premiums.
Goodwill is assigned to reporting units for purposes of impairment testing. A reporting unit is the same as an operating segment or one level below an operating segment. As of October 1, 2025, our reporting units were as follows:

Reportable Segments Reporting Units
U.S. Refreshment Beverages U.S. Beverage Concentrates
U.S. WD
DSD
GHOST
U.S. Coffee U.S. Coffee
International Canada Beverage Concentrates
Canada WD
Canada Coffee
Latin America Beverages

If the carrying value of the reporting unit or intangible asset exceeds its fair value, an impairment charge will be recorded in current earnings for the difference up to the carrying value of the goodwill or intangible asset recorded. Refer to Note 6 for additional information.
Capitalized Customer Incentive Programs
We provide support to certain customers to cover various programs and initiatives to increase net sales, including contributions to customers or vendors for cold drink equipment used to market and sell our products. These programs and initiatives generally directly benefit us over a period of time. Accordingly, costs of these programs and initiatives are recorded in Prepaid expenses and other current assets and Other non-current assets in the Consolidated Balance Sheets. The costs for these programs are amortized over the period to be directly benefited based upon a methodology consistent with our contractual rights under these arrangements.
Accounts Payable
We have agreements with third-party administrators which allow participating suppliers to track our payment obligations, and, if voluntarily elected by the supplier, to sell our payment obligations to financial institutions. Suppliers can sell one or more of our payment obligations at their sole discretion, and our rights and obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted. We have no economic interest in a supplier's decision to enter into these agreements and no direct financial relationship with the financial institutions.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

The table below summarizes activity in our outstanding obligations under supplier financing arrangements, which are confirmed as valid and included in accounts payable :

For the Year Ended December 31,
(in millions) 2025 2024
Balance, beginning of the period $ 1,740   $ 2,389  
Additions 3,424   2,999  
Settlements ( 3,791 ) ( 3,639 )

Effect of exchange rate changes 5   ( 9 )
Balance, end of the period $ 1,378   $ 1,740  

Structured Payables
In the event that we determine that a commercial arrangement described above is more representative of a financing transaction, the payment obligation would be reclassified to structured payables.
Additionally, we have entered into an agreement with a supply chain payment processing intermediary, for the intermediary to act as a virtual credit card sponsor. The card sponsor bills us the original payment amount, effectively financing the transaction. The agreement permits us to utilize the third party to make a broad range of payments.
Structured payables have equal priority with accounts payable and are treated as non-recourse obligations. We record interest for the period the structured payables obligation is outstanding and reflect the proceeds and payments related to these transactions as a financing activity in the Consolidated Statements of Cash Flows.
Mandatory Redemption Liability
Certain of our acquisitions may include other forms of consideration, including mandatorily redeemable liabilities and other earn-out arrangements. As of the acquisition date, we record such consideration, as applicable, at the estimated fair value of the expected future payments associated with the obligation. Any changes to the recorded fair value of the consideration are recognized in earnings in the period in which they occur.
Subsequent to the date of acquisition, if future payments are expected to differ from our estimate as of the date of acquisition, any related fair value adjustments are recognized in the period that such expectation is considered probable. Changes in the fair value of payments are recorded within Other expense (income), net in the Consolidated Statements of Income.
For the year ended December 31 , 2025 , the fair value of our mandatory redemption liability for GHOST was estimated using the Monte Carlo simulation method, which incorporates significant inputs not observable in the market (Level 3 inputs) including forecasted EBITDA expectations, adjusting for market risks and volatility, calculating redemption prices, discounting to present terms with the cost of debt, and averaging results across scenarios to determine fair value, incorporating the market price of risk and volatility estimates from similar companies. As of December 31, 2025 and 2024, the fair value of our m andatory redemption liability associated with GHOST was $ 880 million and $ 689 million, respectively, and is included within Other non-current liabilities within the Consolidated Balance Sheets.
Pension and Post-retirement Medical Benefits
We have U.S. and foreign pension and PRMB plans which provide benefits to a defined group of employees who satisfy age and length of service requirements at our discretion. As of December 31 , 2025 , we have several stand-alone non-contributory defined benefit plans and PRMB plans. Depending on the plan, pension and PRMB benefits are based on a combination of factors, which may include salary, age, and years of service.
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Employee pension and PRMB plan obligations and the associated expense included in the consolidated financial statements are determined from actuarial analyses based on plan assumptions, employee demographic data, years of service, compensation, benefits and claims paid, and employer contributions. Non-cash settlement charges occur when the total amount of lump sum payments made to participants of various U.S. defined pension plans exceed the estimated annual interest and service costs.
The components of net periodic benefit cost other than the service cost component are included in Other expense (income), net, in the Consolidated Statements of Income. The service cost component is included in either Cost of sales or SG&A expenses, depending on the classification of the employee's other compensation costs.
The objective with respect to the funding of our pension plans is to provide adequate assets for the payment of future benefits. Pursuant to this objective, we will fund the pension plans as required by governmental regulations and may consider discretionary contributions as conditions warrant.
We participate in several multi-employer pension plans and makes contributions to those plans, which are recorded in either Cost of sales or SG&A expenses, depending on the classification of the employee's other compensation costs.
Risk Management Programs
We retain selected levels of property, casualty, workers' compensation, health, cyber, and other business risks. Many of these risks are covered under conventional insurance and reinsurance programs with deductibles or self-insured retentions. Accrued liabilities related to the retained casualty and health risks are calculated based on loss experience and development factors, which contemplate a number of variables including claim history and expected trends, and are recorded in Other current liabilities and Other non-current liabilities in the Consolidated Balance Sheets .
Income Taxes
Income taxes are accounted for using the asset and liability approach, which involves determining the temporary differences between assets and liabilities recognized for financial reporting and the corresponding amounts recognized for tax purposes and computing the tax-related carryforwards at the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be reversed. The resulting amounts are deferred tax assets or liabilities. The total of taxes currently payable per the tax return, the deferred tax expense or benefit, and the impact of uncertain tax positions represents the income tax expense or benefit for the year for financial reporting purposes.
We periodically assess the likelihood of realizing our deferred tax assets based on the amount that we believe is more likely than not to be realized. We base our judgment of the recoverability of deferred tax assets primarily on historical earnings, our estimate of current and expected future earnings, and prudent and feasible tax planning strategies.
We establish income tax liabilities to remove some or all of the income tax benefit of any of our income tax positions at the time we determine that the positions become uncertain based upon one of the following: (1) the tax position is not "more likely than not" to be sustained, (2) the tax position is "more likely than not" to be sustained, but for a lesser amount, or (3) the tax position is "more likely than not" to be sustained, but not in the financial period in which the tax position was originally taken. The evaluation of whether or not a tax position is uncertain is based on the following: (1) we presume the tax position will be examined by the relevant taxing authority such as the IRS that has full knowledge of all relevant information, (2) the technical merits of a tax position are derived from authorities such as legislation and statutes, legislative intent, regulations, rulings, and case law, and their applicability to the facts and circumstances of the tax position, and (3) each tax position is evaluated without considerations of the possibility of offset or aggregation with other tax positions taken. We adjust these income tax liabilities when our judgment changes as a result of new information. Any change will impact income tax expense in the period in which such determination is made.
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Derivative Instruments
We are exposed to market risks arising from adverse changes in interest rates, FX rates, and commodity prices. We manage these risks through a variety of strategies, including the use of interest rate contracts, FX forward contracts, commodity forward, future, swap, and option contracts, and supplier pricing agreements.
We do not hold or issue derivative financial instruments for trading or speculative purposes. All derivative instruments are recorded on a gross basis, including those subject to master netting arrangements.
We formally designate and account for certain interest rate contracts and FX forward contracts that meet established accounting criteria under U.S. GAAP as cash flow hedges. For such contracts, the effective portion of the gain or loss on the derivative instruments is recorded, net of applicable taxes, in AOCI. When net income is affected by the variability of the underlying transaction, the applicable offsetting amount of the gain or loss from the derivative instrument deferred in AOCI is reclassified to net income. Cash flows from derivative instruments designated in a qualifying hedging relationship are classified in the same category as the cash flows from the underlying hedged items. If a cash flow hedge were to cease to qualify for hedge accounting, or were terminated, the derivatives would continue to be carried on the balance sheet at fair value until settled, and hedge accounting would be discontinued prospectively. If the underlying hedged transaction ceases to exist, any associated amounts reported in AOCI would be reclassified to earnings at that time.
For derivatives that are not designated or for which the designated hedging relationship is discontinued, the gain or loss on the instrument is recognized in earnings in the period of change.
We have exposure to credit losses from derivative instruments in an asset position in the event of nonperformance by the counterparties to the agreements. Historically, we have not experienced material credit losses as a result of counterparty nonperformance. We select and periodically review our counterparties based on credit ratings, limit our exposure to a single counterparty under defined guidelines, and monitor the market position of the derivative instruments upon execution of a hedging transaction and at least on a quarterly basis.
Loss Contingencies
Legal Matters
From time to time, we are involved in various claims, proceedings, and litigation, including those described in Note 18. We accrue for specific legal proceedings when we determine that the likelihood of an unfavorable outcome is probable and the amount of loss can be reasonably estimated. Management has also identified certain other legal matters where it believes an unfavorable outcome is reasonably possible and/or for which no estimate of possible losses can be made, and where applicable, provides disclosure of such legal matters in Note 18.
Product Warranties
We provide for the estimated cost of product warranties associated with our brewers in cost of sales, at the time product revenue is recognized. Warranty costs are estimated primarily using historical warranty information in conjunction with current engineering assessments applied to the expected repair or replacement costs. The estimate for warranties requires assumptions relating to expected warranty claims which are based on historical claims and known current year factors.
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Supplemental Balance Sheet Information
The following table provides supplemental financial information from the Consolidated Balance Sheets:

  December 31,
(in millions) 2025 2024
Prepaid expenses $ 334   $ 173  
Other current assets 484   433  
Total prepaid expenses and other current assets $ 818   $ 606  

Accrued customer trade $ 444   $ 439  
Accrued termination fees (1)
—   225  
Other accrued expenses 935   920  
Total accrued expenses $ 1,379   $ 1,584  

(1) We paid the termination fee related to the GHOST Transactions in full in the first quarter of 2025. Refer to Note 4 for additional information.
Revenue Recognition
We recognize revenue when performance obligations under the terms of a contract with the customer are satisfied. Branded product sales, which include LRBs, K-Cup pods, appliances, and other, occur once control is transferred upon delivery to the customer. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods. The amount of consideration we receive and revenue we recognize varies with changes in customer incentives offered to our customers and their customers. These incentives and discounts, which are recorded as a reduction of revenue, include cash discounts, price allowances, volume-based rebates, product placement fees, and other financial support for items such as trade promotions, displays, new products, consumer incentives, and advertising assistance. Accruals are established for the expected payout based on contractual terms, volume-based metrics, and/or historical trends, and require management judgment with respect to estimating customer participation and performance levels. Sales taxes and other similar taxes are excluded from revenue. Costs associated with shipping and handling activities, such as merchandising, are included in SG&A expenses as revenue is recognized.
Cost of Sales
Cost of goods sold includes all costs to acquire and manufacture our products including raw materials, direct and indirect labor, manufacturing overhead, including depreciation expense, and all other costs incurred to bring the product to salable condition. All other costs incurred after this condition is met are considered selling costs and included in SG&A expenses.
Selling, General, and Administrative Expenses
Transportation and Warehousing Costs
We incurred $ 2,087 million, $ 1,910 million, and $ 1,783 million of transportation and warehousing costs during the years ended December 31, 2025, 2024, and 2023, respectively. These amounts, which primarily relate to shipping and handling costs, are recorded in SG&A expenses in the Consolidated Statements of Income.
Advertising and Marketing Expense
Advertising and marketing production costs related to television, print, radio, and other marketing investments are expensed as of the first date the advertisement takes place. All other advertising and marketing costs are expensed as incurred. Advertising and marketing expenses were approximately $ 629 million, $ 657 million, and $ 640 million for the years ended December 31, 2025, 2024, and 2023, respectively. Advertising and marketing expenses are recorded in SG&A expenses in the Consolidated Statements of Income. Prepaid advertising and marketing costs are recorded as Other current and Other non-current assets in the Consolidated Balance Sheets.
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Research and Development Costs
Research and development costs are expensed when incurred and amounted to $ 70 million, $ 70 million, and $ 66  million for the years ended December 31, 2025, 2024, and 2023, respectively. These expenses are recorded primarily in SG&A expenses in the Consolidated Statements of Income.
Stock-Based Compensation Expense
Stock-based compensation expense is recognized within SG&A expenses in the Consolidated Statements of Income related to the fair value of employee stock-based awards, ratably over the vesting period, and only for awards expected to vest. Estimated forfeiture rates are based on historical data and are periodically reassessed.
Compensation cost is based on the grant-date fair value. The fair value of RSUs and PSUs is determined based on the number of units granted and the grant date price of common stock.
Restructuring and Integration Costs
We implement restructuring programs from time to time and incur costs that are designed to improve operating effectiveness and lower costs. When these programs are implemented, we incur expenses, such as employee separations, lease terminations, and other direct exit costs, that qualify as exit and disposal costs under U.S. GAAP. Severance costs are recorded once they are both probable and estimable. Restructuring liabilities that qualify as exit and disposal costs under U.S. GAAP are included in accounts payable and accrued expenses in the consolidated financial statements.
We also incur expenses that are an integral component of, and directly attributable to, the restructuring activities, which do not qualify as exit and disposal costs, such as accelerated depreciation, asset impairments, IT implementation costs, and other incremental costs. We have recorded these costs within SG&A expenses in the Consolidated Statements of Income, and these costs are held within unallocated corporate costs.
Foreign Currency Translation and Transactions
We translate assets and liabilities of our foreign subsidiaries from their respective functional currencies to U.S. dollars at the appropriate spot rates as of the balance sheet date. The functional currency of our operations outside the U.S. is generally the local currency of the country where the operations are located, or U.S. dollars. The results of operations are translated into U.S. dollars at a monthly average rate, calculated using daily exchange rates.
Differences arising from the translation of opening balance sheets of these entities to the rate at the end of the financial year are recognized in AOCI. The differences arising from the translation of foreign results at the average rate are also recognized in AOCI. Such translation differences are recognized as income or expense in the period in which we dispose of the operations.
Transactions in foreign currencies are recorded at the approximate rate of exchange at the transaction date. Assets and liabilities resulting from these transactions are translated at the rate of exchange in effect at the balance sheet date. Such differences are recorded in Cost of sales or Other expense (income), net in the Consolidated Statements of Income, depending on the nature of the underlying transaction .
Earnings per Share
Basic EPS is computed by dividing Net income by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the assumed conversion of all dilutive securities determined through the treasury stock method.
Repurchases of Common Stock
Shares repurchased under authorized share repurchase programs are retired, and the excess purchase price over the par value is recorded to additional paid-in capital.
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The 1% excise tax associated with shares repurchased is recorded to additional paid-in capital. Cash paid related to the excise tax on net share repurchases is included in the Repurchases of common stock, inclusive of excise tax obligation line in the Consolidated Statements of Cash Flows.
RECENTLY ISSUED ACCOUNTING STANDARDS
In February 2024, the FASB issued ASU 2024-03, Income Statement Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) . The objective of ASU 2024-03 is to require entities to provide enhanced disclosures of income statement expenses through disaggregation of specific expense captions. ASU 2024-03 is effective for public companies starting in annual periods beginning after December 15, 2026 and in interim periods beginning after December 15, 2027. We are currently evaluating ASU 2024-03 and the impact of the disclosures to our consolidated financial statements.
RECENTLY ADOPTED PROVISIONS OF U.S. GAAP
As of January 1, 2025 we prospectively adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . The objective of ASU 2023-09 is to enhance disclosures related to income taxes, including specific thresholds for inclusion within the tabular disclosure of income tax rate reconciliation and specified information about income taxes paid. ASU 2023-09 is effective for public companies starting in annual periods beginning after December 15, 2024. Refer to Note 15 for additional information on our income tax related disclosures.

3. JDE Peet's Acquisition and Related Transactions
JDE PEET'S ACQUISITION
On August 24, 2025, we entered into the JDE Peet's Acquisition Agreement, and on January 16, 2026, pursuant to JDE Peet's Acquisition Agreement, KDP commenced a tender offer to acquire all of the issued ordinary shares, excluding ordinary shares in treasury, of JDE Peet's for a cash offer price of € 31.85 per share, without interest. JDE Peet's is a global pure-play coffee company with a portfolio of leading brands including Jacobs, L'OR, and Peet's. The JDE Peet's Acquisition is expected to occur early in the second quarter of 2026 and is subject to the satisfaction or waiver of closing conditions, including the acceptance of the offer by the shareholders of JDE Peet's.
We additionally entered into a series of transactions in order to fund a portion of the consideration of the JDE Peet's Acquisition, as described below. The JV Investment and Preferred Investment are subject to customary closing conditions, including the substantially concurrent closing of the JDE Peet's Acquisition.
BORROWING ARRANGEMENTS
In connection with the JDE Peet's Acquisition, we entered into the Bridge Credit Agreement and the Delayed Draw Term Loan Agreement. Refer to Note 5 for additional information on these borrowing arrangements.
JV INVESTMENT
On October 26, 2025, we entered into the JV Commitment Letter, under which we will contribute the Coffee Production Assets, as well as certain of our related coffee assets (including sales and distribution) in Canada to the Pod Manufacturing JV, and the JV Investors will contribute, through the JV Investor Partner, $ 4 billion in cash in exchange for a 49 % interest in the Pod Manufacturing JV. The remaining 51 % ownership interest will remain under our ownership. Further, the JV Commitment Letter names each of Apollo Global Securities, LLC and KKR Capital Markets, LLC as a joint lead arranger with respect to certain of the transactions. On February 23, 2026, the JV Transaction Agreement was executed. Refer to Note 22 for additional information on the significant terms of the JV Transaction Agreement .
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PREFERRED INVESTMENT
On October 27, 2025, we entered into the Preferred Investment Agreement with the KKR Investor and the Apollo Investor. Under the Preferred Investment Agreement, we agreed to issue and sell to the Preferred Investors, and the Preferred Investors agreed to purchase from us, 3 million shares of our Convertible Preferred Stock, with a par value of $ 0.01 per share, for a purchase price of $ 1,000 per share and an aggregate purchase price of $ 3 billion. The transaction is exempt from the registration requirements of the Securities Act of 1933, as amended. On February 23, 2026, we amended the Preferred Investment Agreement, under which the Preferred Investors agreed to purchase an additional 1.5 million shares of our Convertible Preferred Stock. Refer to Note 22 for additional information .
The Convertible Preferred Stock will rank senior to our common stock with respect to dividend and distribution on liquidation rights. The Convertible Preferred Stock will have a liquidation preference of $ 1,000 per share. The holders of the Convertible Preferred Stock will be entitled to dividends at a rate of 4.75 % per annum, subject to increase in certain cases, and to participate in dividends paid to holders of our common stock on an as-converted basis, provided that any such dividends received on an as-converted basis will reduce, on a dollar-for-dollar basis, the dividends holders are entitled to receive on the Convertible Preferred Stock. Dividends on the Convertible Preferred Stock will be paid in cash. We may choose to defer payment of all or part of any dividends due on the Convertible Preferred Stock; however, we will accrue additional dividends until paid in cash and we will not be able to declare or pay any dividends on or make repurchases of our common stock, subject to certain conditions.
The Convertible Preferred Stock will be convertible into shares of our common stock, at our election or, in certain specified circumstances, the election of the Preferred Investors, at an initial conversion price of $ 37.25 (which will be subject to anti-dilution adjustments, as well as an adjustment in the event that we complete the Separation). Holders may convert up to, in the aggregate, 50% of the Convertible Preferred Stock allocated among such holders and their permitted transferees pro rata at any time, and may convert the remainder following the earliest of the closing of the Separation, the 18-month anniversary of the issuance of the Convertible Preferred Stock, upon foreclosure by a lender under a bona fide loan or other financing arrangement or the 12-month anniversary of any initial public offering of the remaining beverage business if the Separation has not yet occurred. We may require, at any time after the 3-year anniversary of the issuance of the Convertible Preferred Stock to be converted if the closing price per share of our common stock exceeds 150% of the conversion price then in effect for at least twenty trading days in any period of thirty consecutive trading days. After the seventh anniversary of the issue date, we will have the option to redeem the Convertible Preferred Stock at the then-applicable redemption price. In the case of a fundamental change, we will be required to offer to repurchase the Convertible Preferred Stock at a specified price. Preferred Investors will vote with holders of our common stock on an as-converted basis, following the satisfaction of certain conditions.
The Preferred Investment is subject to customary closing conditions, including, among others: (i) the continued accuracy of the representations and warranties contained in the Preferred Investment Agreement; (ii) the performance in all material respects by each party of its respective covenants and agreements under the Preferred Investment Agreement; (iii) the expiration of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976; and (iv) the substantially concurrent closing of the JDE Peet's Acquisition.

4. Other Acquisitions

DYLA ACQUISITION
On June 2, 2025, we completed the acquisition of Dyla for aggregate consideration of $ 98  million. Dyla is a leading player in powdered drink mixes and liquid water enhancers. Prior to the acquisition, we held direct and indirect ownership interests in Dyla and accounted for the investment as an equity method investment. We paid $ 72  million in cash, net of our previous ownership interest, in order to complete the acquisition.
Our allocation of consideration exchanged to the net tangible and intangible assets acquired and liabilities assumed was based on estimated fair values as of June 2, 2025, and the consideration w as primarily allocated to intangible assets and goodwill. In the third quarter of 2025, we finalized our allocation of consideration exchanged in the Dyla acquisition, with no significant measurement period adjustments recorded.
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GHOST TRANSACTIONS
On December 31, 2024, we acquired a 60 % ownership interest in GHOST for aggregate consideration of $ 999  million. GHOST is a lifestyle sports nutrition business with a portfolio anchored by GHOST Energy, a leading RTD energy brand. As part of the GHOST Transactions, we also entered into an agreement which requires us to purchase the remaining equity interests in GHOST in 2028.
Additionally, we executed an agreement with GHOST and ABI which terminated the distribution rights for certain GHOST products by ABI, effective March 3, 2025, for a termination payment to ABI of $ 225 million, after which, we assumed the distribution of such products. The termination payment was accrued as of December 31, 2024 and paid in the first quarter of 2025, with the corresponding expense included within Other operating (income) expense, net in the Consolidated Statements of Income.
Under the acquisition method of accounting, total consideration was as follows:

(in millions) Total Consideration
Initial payment to acquire 60% of GHOST $ 999  
Fair value of mandatory redemption liability for the remainder of the business on December 31, 2024 (1)
689  
Total consideration $ 1,688  

(1) Refer to Note 2 for additional information on the estimation of fair value of our mandatory redemption liability.
The initial payment of $ 999 million was funded primarily by proceeds drawn from the Term Loan Agreement. Refer to Note 5 for additional information.
The following is a summary of the allocation of consideration based on estimated fair values of assets acquired and liabilities assumed in the GHOST Transactions as of December 31, 2024:

(in millions) Fair Value
Brand $ 1,146  
Assets acquired, net of liabilities assumed 82  
Customer relationships 23  
Goodwill (1)
437  
Total consideration 1,688  
Less: Holdback placed in escrow (2)
( 90 )
Acquisition of business $ 1,598  

(1) The goodwill created in the GHOST Transactions is expected to be deductible for tax purposes and is included in our U.S. Refreshment Beverages segment.
(2) Amount includes both the current and non-current portion of the holdback liability as of December 31, 2024. Refer to Note 2 for additional information.
In the first quarter of 2025, we finalized our allocation of consideration, with no significant measurement period adjustments recorded.

KALIL ACQUISITION
On August 9, 2024, we acquired all of Kalil's production, sales, and distribution assets for total consideration of $ 103 million. Kalil is an independent bottler with bottling and distribution rights in Arizona to key KDP brands, including Canada Dry, 7UP, A&W, Snapple, and Core Hydration. Upon completion of the Kalil Acquisition, approximately $ 8 million of cash was held back and placed in escrow, which was released in the fourth quarter of 2025.
In 2025, we finalized our allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed in the Kalil Acquisition, which was primarily allocated to property, plant, and equipment and other intangible assets, based on estimated fair values as of August 9, 2024. No significant measurement period adjustments recorded.
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5. Long-term Obligations and Borrowing Arrangements
The following table summarizes our long-term obligations:

December 31,
(in millions) 2025 2024
Notes
$ 13,931   $ 12,948  
Term loan —   990  
Less: current portion of long-term obligations ( 895 ) ( 1,026 )
Long-term obligations $ 13,036   $ 12,912  

The following table summarizes our short-term borrowings and current portion of long-term obligations:

December 31,
(in millions) 2025 2024
Commercial paper notes $ 2,210   $ 1,616  
Current portion of long-term obligations:
Notes
895   1,026  

Short-term borrowings and current portion of long-term obligations $ 3,105   $ 2,642  

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SENIOR UNSECURED NOTES
Our Notes consisted of the following:

(in millions) December 31,
Issuance Maturity Date Rate 2025 2024

2025 Merger Notes May 25, 2025 4.417 % $ —   $ 529  
2025 Notes November 15, 2025 3.400 % —   500  
2026 Notes September 15, 2026 2.550 % 400   400  
2026-B Notes November 15, 2026 Floating (2)
500   —  
2027-B Notes March 15, 2027 Floating (2)
350   350  
2027-C Notes March 15, 2027 5.100 % 750   750  
2027 Notes June 15, 2027 3.430 % 500   500  
2028 Notes May 15, 2028 4.350 % 500   —  
2028 Merger Notes May 25, 2028 4.597 % 1,112   1,112  
2029-B Notes March 15, 2029 5.050 % 750   750  
2029 Notes April 15, 2029 3.950 % 1,000   1,000  
2030 Notes May 1, 2030 3.200 % 750   750  
2030-B Notes May 15, 2030 4.600 % 500   —  
2031 Notes March 15, 2031 2.250 % 500   500  
2031-B Notes March 15, 2031 5.200 % 500   500  
2032 Notes April 15, 2032 4.050 % 850   850  
2034 Notes March 15, 2034 5.300 % 650   650  
2035 Notes May 15, 2035 5.150 % 500   —  
2038 Merger Notes May 25, 2038 4.985 % 211   211  
2045 Notes November 15, 2045 4.500 % 550   550  
2046 Notes December 15, 2046 4.420 % 400   400  
2048 Merger Notes May 25, 2048 5.085 % 391   391  
2050 Notes May 1, 2050 3.800 % 750   750  
2051 Notes March 15, 2051 3.350 % 500   500  
2052 Notes April 15, 2052 4.500 % 1,150   1,150  
Principal amount 14,064   13,093  
Adjustment from principal amount to carrying amount (1)
( 133 ) ( 145 )
Carrying amount $ 13,931   $ 12,948  

(1) The carrying amount includes unamortized discounts, debt issuance costs, and fair value adjustments related to the DPS Merger.
(2) Our floating rate notes bear interest at a rate equal to Compounded SOFR (as defined in the respective supplemental indenture) plus a spread of 0.58 % and 0.88 % for the 2026-B Notes and the 2027-B Notes, respectively
On May 5, 2025, we completed the issuance of the 2026-B Notes, 2028 Notes, 2030-B Notes, and 2035 Notes, with an aggregate principal amount of $ 2 billion. The discount associated with these notes was approximately $ 4  million, and we incurred $ 10 million in debt issuance costs. The proceeds from the issuance were used for the repayment of outstanding commercial paper borrowings.
The 2025 Merger Notes and 2025 Notes were both repaid at maturity using proceeds from commercial paper.
Notes, among other things, contain customary default provisions and limit our ability to incur indebtedness secured by principal properties, to enter into certain sale and leaseback transactions, and to enter into certain mergers or transfers of substantially all of our assets. The Notes are fully and unconditionally guaranteed by certain of our direct and indirect subsidiaries. As of  December 31 , 2025 , we were in compliance with all financial covenant requirements of the Notes.
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VARIABLE-RATE BORROWING ARRANGEMENTS
Delayed Draw Term Loan Agreement
In connection with the JDE Peet's Acquisition, we entered into the Delayed Draw Term Loan Agreement on December 18, 2025, among KDP, as borrower, the lenders party thereto, and Morgan Stanley Senior Funding, Inc. as administrative agent. We incurred approximately $ 15 million in deferred financing fees related to the issuance, which were capitalized and are being amortized to Interest expense, net through February 2027.
The Delayed Draw Term Loan Agreement provides for a 364-day senior unsecured term loan facility in an aggregate amount not to exceed € 10.35  billion, the proceeds of which may be used to fund the JDE Peet's Acquisition, as well as related fees and expenses.
Borrowings under the Delayed Draw Term Loan Agreement will bear interest at a rate per annum equal to EURIBOR plus a margin of 0.750 % to 1.750 % depending on the rating of certain of our index debt. The undrawn commitments under the facility are subject to a commitment fee which commenced on December 23, 2025 at a per annum rate of 0.060 % to 0.200 % depending on the rating of certain of our index debt. The Delayed Draw Term Loan Agreement contains customary representations and warranties for investment grade financings. The Delayed Draw Term Loan Agreement also contains (i) certain affirmative covenants, including those that impose reporting and/or operating obligations on us and our subsidiaries, (ii) certain negative covenants that generally limit, subject to exceptions, us and our subsidiaries from taking certain actions, including incurring liens and consummating certain fundamental changes, (iii) financial covenants in the form of a minimum interest coverage ratio of 3.25 to 1.00 that will apply after the initial funding date and a maximum total net leverage ratio of 6.25 to 1.00 that will apply after the initial funding date only upon a downgrade in the ratings of certain of our index debt, and (iv) events of default customary for financings of this type.
As of December 31 , 2025 , the full amount of the Delayed Draw Term Loan Agreement remains available and undrawn.
Bridge Credit Agreement
In connection and concurrently with the entry into the JDE Peet's Acquisition Agreement, we entered into the Bridge Credit Agreement, a 364-day senior unsecured bridge loan facility in an aggregate amount not to exceed € 16.2  billion, on August 24, 2025, among KDP, as borrower, with the lenders party thereto, and Morgan Stanley Senior Funding, Inc. as administrative agent. We incurred approximately $ 91 million in deferred financing fees related to the issuance, which were capitalized and are being amortized to Interest expense, net through February 2027. We paid additional fees of $ 15 million on December 23, 2025, as the facility remained undrawn.
Borrowings under the Bridge Credit Agreement will bear interest at a rate per annum equal to EURIBOR plus a margin of 0.750 % to 2.500 % depending on the rating of certain of our index debt and the period for which the bridge loan remains outstanding after the initial funding date. The undrawn commitments under the facility are subject to a commitment fee, which commenced on December 23, 2025, at a per annum rate of 0.060 % to 0.200 % depending on the rating of certain of our index debt. The Bridge Credit Agreement contains customary representations and warranties for investment grade financings. The Bridge Credit Agreement also contains (i) certain affirmative covenants, including those that impose reporting and/or operating obligations on us and our subsidiaries, (ii) certain negative covenants that generally limit, subject to exceptions, us and our subsidiaries from taking certain actions, including incurring liens and consummating certain fundamental changes, (iii) financial covenants in the form of a minimum interest coverage ratio of 3.25 to 1.00 that will apply after the initial funding date and a maximum total net leverage ratio of 6.25 to 1.00 that will apply after the initial funding date only upon a downgrade in the ratings of certain of our index debt, and (iv) events of default customary for financings of this type.
On December 18, 2025, the Bridge Credit Agreement facility was reduced to € 5.85 billion as a result of the execution of the Delayed Draw Term Loan Agreement, as discussed above. As of December 31 , 2025 , the remaining amount of the Bridge Credit Agreement remains available and undrawn.
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Term Loan Agreement
On October 25, 2024, we entered into the Term Loan Agreement among KDP, as borrower, the lenders party thereto and Bank of America, N.A., as administrative agent. On December 31, 2024, we drew $ 990 million on the first tranche of the Term Loan Agreement and used the proceeds to fund the GHOST Transactions.
On January 31, 2025, we repaid the amount outstanding under the Term Loan Agreement using proceeds from commercial paper. On May 7, 2025, we terminated the Term Loan Agreement. We had no outstanding loan balances as of the termination date.
Revolving Credit Agreement
On March 31, 2025, we entered into the 2025 Revolving Credit Agreement among KDP, as borrower, the lenders from time to time party thereto and JPMorgan Chase, Bank, N.A., as administrative agent. We incurred approximately $ 4  million in deferred financing fees related to the issuance. On September 30, 2025, the 2025 Revolving Credit Agreement was amended to increase the capacity to $ 4.3 billion.
The following table summarizes information about the 2025 Revolving Credit Agreement:

(in millions) December 31 , 2025 December 31, 2024
Issuance Maturity Date Capacity Carrying Value Carrying Value
2025 Revolving Credit Agreement (1)
March 31, 2030 $ 4,300   $ —   $ —  

(1) The 2025 Revolving Credit Agreement has $ 200 million of letters of credit limit, with none utilized as of December 31 , 2025 .
Borrowings under the 2025 Revolving Credit Agreement will bear interest at a rate per annum equal to, at our option, the term SOFR rate plus a margin of 0.750 % to 1.250 % or the alternative base rate plus a margin of zero to 0.250 %, in each case, depending on the rating of certain of our index debt. The 2025 Revolving Credit Agreement contains customary representations and warranties for investment grade financings. The 2025 Revolving Credit Agreement also contains (i) certain customary affirmative covenants, including those that impose certain reporting and/or performance obligations on us and our subsidiaries, (ii) certain customary negative covenants that generally limit, subject to various exceptions, us and our subsidiaries from taking certain actions, including, without limitation, incurring liens and consummating certain fundamental changes, (iii) a financial covenant in the form of a minimum interest coverage ratio of 3.25 to 1.00, and (iv) customary events of default (including a change of control) for financings of this type.
As of December 31 , 2025 , we were in compliance with our minimum interest coverage ratio with respect to the 2025 Revolving Credit Agreement .
Commercial Paper Program
We have a commercial paper program, under which we may issue unsecured commercial paper notes on a private placement basis. The maximum aggregate amount available under the facility is $ 4  billion. The maturities of the commercial paper notes vary, but commercial paper notes are classified as short-term, as maturities do not exceed one year. We issue commercial paper notes as needed for general corporate purposes. Outstanding commercial paper notes rank equally with all of the commercial paper notes' existing and future unsecured borrowings.
The following table provides information about our weighted average borrowings under our commercial paper program:

For the Year Ended December 31,
(in millions, except %) 2025 2024 2023
Weighted average commercial paper borrowings $ 2,285   $ 2,270   $ 1,267  
Weighted average borrowing rates 4.54   % 5.42   % 5.41   %

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Letters of Credit Facility
In addition to the portion of the 2025 Revolving Credit Agreement reserved for issuance of letters of credit, we have an incremental letter of credit facility. Under this facility, $ 150 million is available for the issuance of letters of credit, $ 63 million of which was utilized as of December 31 , 2025 and $ 87 million of which remains available for use.
FAIR VALUE DISCLOSURES
The fair value of our commercial paper approximates the carrying value and is considered Level 2 within the fair value hierarchy.
The fair values of our Notes are based on current market rates available to us and are considered Level 2 within the fair value hierarchy. The difference between the fair value and the carrying value represents the theoretical net premium or discount that would be paid or received to retire all the Notes and related unamortized costs to be incurred at such date. The fair value of our Notes was $ 13,196 million and $ 12,036 million as of December 31, 2025 and 2024, respectively.

6. Goodwill and Intangible Assets
GOODWILL
Changes in the carrying amount of goodwill by reportable segment are as follows:

(in millions) U.S. Refreshment Beverages U.S. Coffee International Total
Balance as of December 31, 2023
$ 8,714   $ 8,622   $ 2,866   $ 20,202  
Foreign currency translation —   —   ( 290 ) ( 290 )
Acquisitions (1)
447   —   —   447  
Impairment (2)
( 306 ) —   —   ( 306 )
Balance as of December 31, 2024 (3)
8,855   8,622   2,576   20,053  
Foreign currency translation —   —   179   179  
Acquisitions (1)
15   —   —   15  

Balance as of December 31, 2025 (3)
$ 8,870   $ 8,622   $ 2,755   $ 20,247  

(1) Refer to Note 4 for additional information on acquisitions.
(2) Impairment activity during the year ended December 31, 2024 represents impairment of our U.S. WD reporting unit. Refer to Impairment Analysis - 2024 Impairment Analysis below for further information.
(3) As of December 31, 2025 and 2024, goodwill for the U.S. Refreshment Beverages segment is inclusive of accumulated impairment losses of $ 306 million. There were no accumulated impairment losses for goodwill as of December 31, 2023.
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INTANGIBLE ASSETS OTHER THAN GOODWILL
The net carrying amounts of intangible assets other than goodwill are as follows:

December 31 , 2025 December 31, 2024
(in millions)  Gross Amount Accumulated Amortization Net Amount  Gross Amount Accumulated Amortization Net Amount
Intangible assets with definite lives:
Acquired technology $ 1,146   $ ( 694 ) $ 452   $ 1,146   $ ( 621 ) $ 525  
Customer relationships 683   ( 301 ) 382   666   ( 270 ) 396  
Contractual arrangements 146   ( 30 ) 116   144   ( 21 ) 123  
Trade names 126   ( 126 ) —   126   ( 124 ) 2  
Brands 76   ( 40 ) 36   51   ( 32 ) 19  
Distribution rights 162   ( 35 ) 127   66   ( 23 ) 43  
Other 25   ( 3 ) 22   —   —   —  
Total intangible assets with definite lives $ 2,364   $ ( 1,229 ) $ 1,135   $ 2,199   $ ( 1,091 ) $ 1,108  

Intangible assets with indefinite lives:
Brands (1)
$ 19,993   $ 19,848  
Trade names 2,478   2,478  
Distribution rights 119   200  
Total intangible assets with indefinite lives 22,590   22,526  
Total intangible assets, net $ 23,725   $ 23,634  

(1) The change in brands with indefinite lives was driven by favorable foreign currency translation impacts of $ 223 million, which was partially offset by non-cash impairment charges of $ 78 million during the year ended December 31, 2025. Refer to 2025 Impairment Analysis below for further information.
Amortization expense for intangible assets with definite lives was as follows:

Year Ended December 31,
(in millions) 2025 2024 2023
Amortization expense $ 138   $ 133   $ 137  

Amortization expense of these intangible assets is expected to be as follows:

For the Years Ending December 31,
(in millions) 2026 2027 2028 2029 2030
Expected amortization expense $ 134   $ 117   $ 109   $ 106   $ 100  

GOODWILL AND INTANGIBLE ASSETS IMPAIRMENT
2025 Impairment Analysis
For the year ended December 31, 2025, we performed a Step 0 analysis for certain indefinite lived intangible assets, including trade names and certain distribution rights, and did not identify any indicators of impairment. For goodwill, indefinite lived brands, and reacquired distribution rights, we performed a Step 1 analysis. As a result, non-cash impairment charges of $ 78  million were recorded specific to certain brands in the U.S. Refreshment Beverages segment. The primary factor that led to the brand impairment determination as of October 1, 2025 was an increase in our discount rate.
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2024 Impairment Analysis
For the year ended December 31, 2024, we performed a Step 0 analysis for certain indefinite lived intangible assets, including trade names and distribution rights, and did not identify any indicators of impairment. For goodwill and indefinite lived brands, we performed a Step 1 analysis. As a result, non-cash impairment charges of $ 412  million were recorded specific to certain brands in the U.S. Refreshment Beverages segment, and a non-cash impairment charge of $ 306 million was recorded to goodwill related to the U.S. Warehouse Direct reporting unit in the U.S. Refreshment Beverages segment. The primary factors that led to the brand impairment determination as of October 1, 2024, primarily led by Snapple, were a downward outlook for operating cash flows in our strategic plan, which led to a reduction in the long-term growth rate. The primary factors that led to the goodwill impairment determination as of October 1, 2024, driven by our U.S. Warehouse Direct reporting unit, were headwinds experienced by certain brands in our still portfolio, including a downward outlook for operating cash flows in our strategic plan, which led to a reduction in the long-term growth rate.
2023 Impairment Analysis
For the year ended December 31, 2023, we performed a Step 1 analysis on all goodwill and indefinite lived intangible assets. No impairments were recorded as a result of these analyses.
Additional Impairment Considerations
The following table provides the range of rates considered to be significant inputs that were used in the annual impairment analyses as of October 1, 2025, 2024, and 2023:

2025 2024 2023
Rate Minimum Maximum Minimum Maximum Minimum Maximum
Discount rates 9.5   % 12.0   % 7.0   % 9.5   % 8.0   % 13.5   %
Long-term growth rates —   % 3.5   % —   % 3.5   % —   % 4.0   %
Royalty rates (1)
1.0   % 1.0   % 1.0   % 1.0   % 1.0   % 10.0   %

(1) Royalty rates were used in a Step 1 quantitative analysis of certain non-priority brands for the years ended December 31, 2025, 2024, and 2023, and trade names for the year ended December 31, 2023.
The results of the impairment analyses of our indefinite lived priority brands as of October 1, 2025, 2024, and 2023 were as follows:

2025 2024 2023
Headroom Percentage Carrying Value Fair Value Carrying Value Fair Value Carrying Value Fair Value
Brands
0% (1)
$ 1,110   $ 1,110   $ 280   $ 280   $ —   $ —  
Less than 25% 2,847   3,110   2,580   2,900   2,274   2,493  
26 - 50% 314   440   1,488   2,160   2,339   3,018  
In excess of 50% 15,639   29,280   14,481   34,490   14,767   29,002  

(1) Carrying value reflects the results of the annual impairment analysis recognized during the years ended December 31, 2025 and 2024.
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7. Derivatives
INTEREST RATES
Economic Hedges
We are exposed to interest rate risk related to our borrowing arrangements and obligations. We enter into interest rate contracts to provide predictability in our overall cost structure and to manage the balance of fixed-rate and variable-rate debt. We primarily enter into receive-fixed, pay-variable and receive-variable, pay-fixed swaps, and swaption contracts. A natural hedging relationship exists in which changes in the fair value of the instruments act as an economic offset to changes in the fair value of the underlying items. Changes in the fair value of these instruments are recorded in earnings throughout the term of the derivative instrument and are generally reported in Interest expense, net in the Consolidated Statements of Income. As of December 31 , 2025 , economic interest rate derivative instruments have maturities ranging from March 2027 to November 2046.
Cash Flow Hedges
From time to time, we designate certain interest rate contracts as cash flow hedges in order to manage the exposures resulting from changes in interest rates as described above. In October 2025, in order to hedge the variability in cash flows from interest rate changes associated with our planned future issuances of long-term debt, we entered into forward starting swaps with terms ranging from 5 to 30 years and designated them as cash flow hedges.
FOREIGN EXCHANGE
We are exposed to FX risk in our foreign subsidiaries and with certain counterparties in foreign jurisdictions, which may transact in currencies that are different from the functional currencies of our legal entities. Additionally, the balance sheets of these subsidiaries are subject to exposure from movements in exchange rates.
Economic Hedges
We hold FX forward contracts to economically manage the balance sheet exposures resulting from changes in the FX rates described above. The intent of these FX contracts is to minimize the impact of FX risk associated with balance sheet positions not in local currency. In these cases, a hedging relationship exists in which changes in the fair value of the instruments act as an economic offset to changes in the fair value of the underlying items.
Additionally, we have significant anticipated Euro-denominated cash outflows resulting from the intended JDE Peet's Acquisition, as described in Note 3. To reduce our exposure to exchange rate fluctuations associated with the planned acquisition consideration and related financing, we entered into FX forward contracts during the third quarter of 2025.
Changes in the fair value of these instruments are recorded in earnings throughout the term of the derivative instrument and are reported in the same caption of the Consolidated Statements of Income as the associated risk. As of December 31 , 2025 , these FX contracts have maturities ranging from January 2026 to October 2026.
Cash Flow Hedges
We designate certain FX forward contracts as cash flow hedges in order to manage the exposures resulting from changes in the FX rates described above. These designated FX forward contracts relate to forecasted inventory purchases in U.S. dollars of our foreign subsidiaries. The intent of these FX contracts is to provide predictability in our overall cost structure. As of December 31 , 2025 , these FX contracts have maturities ranging from January 2026 to June 2027.
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COMMODITIES
Economic Hedges
We centrally manage the exposure to volatility in the prices of certain commodities used in our production process and transportation through various derivative contracts. We generally hold some combination of future, swap, and option contracts that economically hedge certain risks. In these cases, a hedging relationship exists in which changes in the fair value of the instruments act as an economic offset to changes in the fair value of the underlying items or as an offset to certain costs of production. Changes in the fair value of these instruments are recorded in earnings throughout the term of the derivative instrument and are reported in the same line item of the Consolidated Statements of Income as the hedged transaction. Unrealized gains and losses are recognized as a component of unallocated corporate costs until our reportable segments are affected by the completion of the underlying transaction, at which time the gain or loss is reflected as a component of the respective segment's income from operations. As of December 31 , 2025 , these commodity contracts have maturities ranging from January 2026 to January 2028.
NOTIONAL AMOUNTS OF DERIVATIVE INSTRUMENTS
The following table presents the notional amounts of our outstanding derivative instruments by type:

December 31,
(in millions) 2025 2024
Interest rate contracts
Forward starting swaps, not designated as hedging instruments $ 2,300   $ 1,700  
Forward starting swaps, designated as cash flow hedges 1,500   —  

FX contracts
Forward contracts, not designated as hedging instruments (1)
12,436   490  
Forward contracts, designated as cash flow hedges 597   486  
Commodity contracts, not designated as hedging instruments (2)
595   515  

(1) Includes € 10 billion of FX forward contracts entered into during the third quarter of 2025 in connection with the planned JDE Peet's Acquisition.
(2) Notional value for commodity contracts is calculated as the expected volume times strike price per unit on a gross basis.
FAIR VALUE OF DERIVATIVE INSTRUMENTS
The fair values of commodity contracts, interest rate contracts, and FX forward contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. The fair values of commodity contracts are valued using the market approach based on observable market transactions, primarily underlying commodities futures or physical index prices, at the reporting date. Interest rate contracts are valued using models based primarily on readily observable market parameters, such as SOFR forward rates, for all substantial terms of our contracts and credit risk of the counterparties. FX forward contracts are valued using quoted FX forward rates at the reporting date. Therefore, we have categorized these contracts as Level 2.
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Not Designated as Hedging Instruments
The following table summarizes the location of the fair value of our derivative instruments which are not designated as hedging instruments within the Consolidated Balance Sheets. All such instruments are considered Level 2 within the fair value hierarchy.

December 31,
(in millions) Balance Sheet Location 2025 2024
Assets:

FX forward contracts Prepaid expenses and other current assets $ 5   $ 7  
Commodity contracts Prepaid expenses and other current assets 47   32  

FX forward contracts Other non-current assets —   4  
Commodity contracts Other non-current assets 3   2  

Liabilities:      
Interest rate contracts Other current liabilities $ 16   $ 22  
FX forward contracts Other current liabilities 38   4  
Commodity contracts Other current liabilities 9   82  
Interest rate contracts Other non-current liabilities 381   345  

Commodity contracts Other non-current liabilities 23   3  

Designated as Hedging Instruments
The following table summarizes the location of the fair value of our derivative instruments which are designated as hedging instruments within the Consolidated Balance Sheets. All such instruments are considered Level 2 within the fair value hierarchy.

December 31,
(in millions) Balance Sheet Location 2025 2024
Assets:
FX contracts Prepaid expenses and other current assets $ 2   $ 41  
FX contracts Other non-current assets 1   —  

Interest rate contracts Other non-current assets 37   —  

Liabilities:
FX contracts Other current liabilities $ 16   $ —  
Interest rate contracts Other current liabilities 2   —  

IMPACT OF DERIVATIVE INSTRUMENTS NOT DESIGNATED AS HEDGING INSTRUMENTS
The following table presents the amount of losses (gains) recognized in the Consolidated Statements of Income related to derivative instruments not designated as hedging instruments under U.S. GAAP during the periods presented. Amounts include both realized and unrealized gains and losses.

For the Year Ended December 31,
(in millions) Income Statement Location 2025 2024 2023
Interest rate contracts Interest expense, net $ 2   $ 63   $ ( 26 )

FX forward contracts Cost of sales ( 4 ) ( 6 ) ( 2 )
FX forward contracts Other expense (income), net 36   ( 10 ) 5  
Commodity contracts Cost of sales ( 117 ) 28   22  
Commodity contracts SG&A expenses 1   10   17  

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IMPACT OF CASH FLOW HEDGES
The following table presents the amount of net gains reclassified from AOCI into the Consolidated Statements of Income related to derivative instruments designated as cash flow hedging instruments during the periods presented:

For the Year Ended December 31,
(in millions) Income Statement Location 2025 2024 2023
Interest rate contracts (1)
Interest expense, net $ ( 13 ) $ ( 12 ) $ ( 74 )
FX contracts Cost of sales ( 17 ) ( 3 ) —  

(1) Amounts recognized during the year ended December 31, 2023 include the realized gains associated with the termination of forward starting swaps designated as cash flow hedges of approximately $ 66  million .
We expect to reclassify approximately $ 14  million of pre-tax net gains and $ 10  million of pre-tax net losses from AOCI into net income during the next twelve months related to interest rate contracts and FX contracts, respectively.

8. Leases
The following table presents the components of lease cost:

For the Year Ended December 31,
(in millions) 2025 2024 2023
Operating lease cost $ 182   $ 170   $ 159  
Finance lease cost
Amortization of right-of-use assets 113   95   81  
Interest on lease liabilities 38   33   25  
Variable lease cost (1)
36   37   39  
Short-term lease cost —   2   1  
Sublease income —   ( 1 ) —  
Total lease cost $ 369   $ 336   $ 305  

(1) Variable lease cost primarily consists of common area maintenance costs, property taxes, and adjustments for inflation.
The following tables present supplemental information about our leases:

December 31,
(in millions) Balance Sheet Location 2025 2024
Assets:
Operating lease right-of-use assets
Other non-current assets $ 845   $ 880  
Finance lease right-of-use assets (1)
Property, plant, and equipment, net 919   784  

Liabilities:
Operating lease liability Other current liabilities $ 127   $ 128  
Finance lease liability Other current liabilities 179   125  
Operating lease liability Other non-current liabilities 764   790  
Finance lease liability Other non-current liabilities 745   677  

(1) Amounts are presented net of accumulated amortization of $ 426 million and $ 334 million as of December 31, 2025 and 2024, respectively.
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For the Year Ended December 31,
(in millions) 2025 2024 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 175   $ 161   $ 149  
Operating cash flows from finance leases 38   32   25  
Financing cash flows from finance leases 129   115   95  
Right-of-use assets obtained in exchange for lease obligations:
Operating leases (1)
$ 126   $ 118   $ 112  
Finance leases (2)
278   196   109  

(1) Includes impacts from lease modifications of $ 16 million during the year ended December 31, 2025.
(2) Includes impacts from lease modifications of $ 45 million during the year ended December 31, 2025 .
The following table presents information about our weighted average discount rate and remaining lease term:

December 31,
2025 2024
Weighted average discount rate
Operating leases 5.3   % 5.3   %
Finance leases 4.8   % 4.5   %
Weighted average remaining lease term
Operating leases 8 years 9 years
Finance leases 9 years 9 years

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS
Future minimum lease payments for non-cancellable leases that have commenced and are reflected in the Consolidated Balance Sheets as of December 31 , 2025 were as follows:

(in millions) Operating Leases Finance Leases
2026 $ 156   $ 221  
2027 155   135  
2028 123   124  
2029 116   118  
2030 108   115  
Thereafter 446   420  
Total future minimum lease payments 1,104   1,133  
Less: imputed interest ( 213 ) ( 209 )
Present value of minimum lease payments $ 891   $ 924  

SIGNIFICANT LEASES THAT HAVE NOT YET COMMENCED
As of December 31 , 2025 , we have entered into leases that have not yet commenced with estimated aggregated future lease payments of approximately $ 157 million. These leases will commence in 2026 and 2027, with initial lease terms ranging from 5 years to 10 years.
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ASSET SALE-LEASEBACK TRANSACTION
In 2023, we entered into an asset sale-leaseback transaction with the Veyron SPEs. A gain on the sale-leaseback of $ 6 million was recorded in Other operating (income) expense, net during the year ended December 31, 2023, and the leaseback is accounted for as an operating lease.
The initial term of the leaseback is 15 years, with two 10-year renewal options. The renewal options are not reasonably assured as (i) our position that the dynamic environment in which we operate precludes our ability to be reasonably certain of exercising the renewal options in the distant future and (ii) the options are contingent on us remaining investment grade and no change-in-control as of the end of the lease term. The leaseback has an RVG. Refer to Note 19 for additional information about RVGs associated with the asset sale-leaseback transaction.

9. Segments
Our three operating and reportable segments consist of the following:
• The U.S. Refreshment Beverages segment reflects sales in the U.S. from the manufacture and distribution of branded concentrates, syrups, finished beverages, and other consumables, including the sales of our own brands and third-party brands, to third-party bottlers, distributors, and retailers.
• The U.S. Coffee segment reflects sales in the U.S. from the manufacture and distribution of finished goods relating to our K-Cup pods, single serve brewers and accessories, and other coffee products to partners, retailers, and directly to consumers through the Keurig.com website.
• The International segment reflects sales in international markets, including the following:
◦ Sales in Canada, Mexico, the Caribbean, and other international markets from the manufacture and distribution of branded concentrates, syrups, and finished beverages, including sales of our own brands and third-party brands, to third-party bottlers, distributors, and retailers.
◦ Sales in Canada from the manufacture and distribution of finished goods relating to our single serve brewers, K-Cup pods, and other coffee products.
Segment results are based on management reports provided to the CODM, which is Tim Cofer, our CEO. Net sales and income from operations are the significant financial measures used to assess the operating performance of our operating segments. The CODM periodically monitors our actual results and remaining forecast versus our annual budget for these financial measures, and this information is used to assess performance of the reportable segments, determine the payout of short-term incentive plan compensation, and to establish management's base salaries.
Intersegment sales are recorded at cost and are eliminated in the Consolidated Statements of Income. We have not provided disclosures of intersegment sales or total assets for each reportable segment, as our CODM does not review and is not provided with this information. "Other segment expense (income)" includes Other operating (income) expense, net, as well as other financial statement captions for infrequent charges, such as impairment of goodwill or intangible assets, used to arrive at "Income from operations - reportable segments". "Unallocated corporate costs" are excluded from our measurement of segment performance and include unrealized commodity derivative gains and losses and certain general corporate expenses.
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Information about our operations and significant expenses by reportable segment is as follows:

(in millions) U.S. Refreshment Beverages U.S. Coffee International Total
For the year ended December 31, 2025
Net sales $ 10,439   $ 3,990   $ 2,174   $ 16,603  
Cost of sales 4,217   2,364   1,083  
SG&A expenses 3,206   659   548  
Other segment expense (income) (1)
77   5   ( 3 )
Income from operations - reportable segments $ 2,939   $ 962   $ 546   $ 4,447  
Unallocated corporate costs ( 872 )
Income from operations 3,575  
Interest expense, net 754  

Other expense, net 134  
Income before provision for income taxes $ 2,687  

(1) During the year ended December 31, 2025, Other segment items within the U.S. Refreshment Beverages segment primarily consisted of non-cash impairment charges of $ 78 million recorded specific to certain indefinite lived brand assets. Refer to Note 6 for additional information about these non-cash impairment charges.

(in millions) U.S. Refreshment Beverages U.S. Coffee International Total
For the year ended December 31, 2024
Net sales $ 9,331   $ 3,967   $ 2,053   $ 15,351  
Cost of sales 3,608   2,210   996  
SG&A expenses 2,904   684   521  
Other segment expense (income) (1)
941   ( 6 ) ( 9 )
Income from operations - reportable segments $ 1,878   $ 1,079   $ 545   $ 3,502  
Unallocated corporate costs ( 911 )
Income from operations 2,591  
Interest expense, net 735  

Other income, net ( 58 )
Income before provision for income taxes $ 1,914  

(1) During the year ended December 31, 2024, Other segment items within the U.S. Refreshment Beverages segment primarily consisted of non-cash impairment charges of $ 412 million recorded specific to certain indefinite lived brand assets and $ 306 million recorded to the WD reporting unit goodwill. Refer to Note 6 for additional information about these non-cash impairment charges. Other segment items within the U.S. Refreshment Beverages segment also included the $ 225 million termination payment to ABI for distribution rights related to the GHOST Transactions. Refer to Note 4 for additional information.
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(in millions) U.S. Refreshment Beverages U.S. Coffee International Total
For the year ended December 31, 2023
Net sales $ 8,821   $ 4,071   $ 1,922   $ 14,814  
Cost of sales 3,536   2,228   979  
SG&A expenses 2,810   691   476  
Other segment income ( 8 ) ( 6 ) ( 8 )
Income from operations - reportable segments $ 2,483   $ 1,158   $ 475   $ 4,116  
Unallocated corporate costs ( 924 )
Income from operations 3,192  
Interest expense, net 496  

Other income, net ( 61 )
Income before provision for income taxes $ 2,757  

GEOGRAPHIC DATA
The following tables present information about our operations by geographic region:

  For the Year Ended December 31,
(in millions) 2025 2024 2023
Net sales
U.S. $ 14,502   $ 13,368   $ 12,961  
Foreign 2,101   1,983   1,853  
Net sales $ 16,603   $ 15,351   $ 14,814  

December 31,
(in millions) 2025 2024
Property, plant, and equipment, net
U.S. $ 2,657   $ 2,450  
Foreign 573   514  
Total property, plant, and equipment, net $ 3,230   $ 2,964  

MAJOR CUSTOMER
Walmart is considered a major customer, accounting for more than 10% of our total net sales, and is represented in all three of our reportable segments. The following table provides our net sales to Walmart:

  For the Year Ended December 31,
(in millions) 2025 2024 2023
Net sales
Walmart $ 2,654   $ 2,514   $ 2,476  

Additionally, customers in our U.S. Refreshment Beverages and International segments buy concentrate from us, which is used in finished goods sold by our third-party bottlers to Walmart. These indirect sales further increase the concentration of risk associated with our consolidated net sales as it relates to Walmart.
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10. Net Sales
The following table disaggregates our net sales by portfolio:

(in millions) U.S. Refreshment Beverages U.S. Coffee International Total
For the year ended December 31, 2025
LRB
$ 10,144   $ 69   $ 1,389   $ 11,602  
K-Cup pods
—   3,213   564   3,777  
Appliances —   582   64   646  
Other 295   126   157   578  
Net sales $ 10,439   $ 3,990   $ 2,174   $ 16,603  

For the year ended December 31, 2024
LRB
$ 9,196   $ 38   $ 1,332   $ 10,566  
K-Cup pods
—   3,112   502   3,614  
Appliances —   694   78   772  
Other 135   123   141   399  
Net sales $ 9,331   $ 3,967   $ 2,053   $ 15,351  

For the year ended December 31, 2023
LRB
$ 8,675   $ —   $ 1,230   $ 9,905  
K-Cup pods
—   3,207   477   3,684  
Appliances —   725   74   799  
Other 146   139   141   426  
Net sales $ 8,821   $ 4,071   $ 1,922   $ 14,814  

LRB represents net sales of owned and partner brands within our portfolio and includes branded concentrates, syrup, and finished beverages, including contract manufacturing of KDP branded products for our bottlers and distributors. K-Cup pods represents net sales from owned brands, partner brands, and private label owners. Net sales for partner brands and private label owners are contractual and long-term in nature.

11. Earnings Per Share
The following table presents our basic and diluted EPS and shares outstanding:

For the Year Ended December 31,
(in millions, except per share data) 2025 2024 2023
Net income $ 2,079   $ 1,441   $ 2,181  

Weighted average common shares outstanding 1,358.1   1,362.2   1,399.3  
Dilutive effect of stock-based awards 4.7   6.1   9.1  
Weighted average common shares outstanding and common stock equivalents 1,362.8   1,368.3   1,408.4  

Basic EPS $ 1.53   $ 1.06   $ 1.56  
Diluted EPS 1.53   1.05   1.55  

Anti-dilutive shares excluded from the diluted weighted average shares outstanding calculation 1.3   0.8   1.0  

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12. Employee Benefit Plans
DEFINED BENEFIT PENSION PLANS
Overview
We have several non-contributory defined benefit plans, each having a measurement date of December 31. To participate in the defined benefit plans, eligible employees must have been employed for at least one year. Employee benefit plan obligations and expenses included in the consolidated financial statements are determined using actuarial analyses based on plan assumptions including employee demographic data such as years of service and compensation, benefits and claims paid, and employer contributions, among others. We also participate in various multi-employer defined benefit plans.
One of our U.S. defined benefit pension plans, which is a cash balance plan, was suspended and the accrued benefit was frozen effective December 31, 2008. Participants in this plan no longer earn additional benefits for future services or salary increases. The cash balance plans maintain individual record-keeping accounts for each participant, which are annually credited with interest credits equal to the 12-month average of one-year U.S. Treasury Bill rates, plus 1%, with a required minimum rate of 5%. Additionally, accrued benefits for non-union employees in another of our U.S. defined benefit pension plans were frozen effective November 1, 2025. No additional benefits related to future services or salary increases were accrued for these certain non-union participants after October 31, 2025. This freeze resulted in no curtailment gain or loss.
Financial Statement Impact
The following table sets forth amounts recognized in our financial statements and the pension plans' funded status:

December 31,
(in millions) 2025 2024
Projected benefit obligations
Beginning balance $ 159   $ 169  
Service cost 3   3  
Interest cost 9   9  
Actuarial losses (gains), net 6   ( 5 )
Benefits paid ( 5 ) ( 5 )
Impact of changes in FX rates 3   ( 4 )
Plan amendments 1   —  
Settlements ( 9 ) ( 8 )

Ending balance $ 167   $ 159  

Fair value of plan assets
Beginning balance $ 127   $ 134  
Actual return on plan assets 11   —  
Employer contributions 7   6  
Benefits paid ( 5 ) ( 5 )

Settlements ( 9 ) ( 8 )
Ending balance $ 131   $ 127  

Net liability recognized $ ( 36 ) $ ( 32 )

Current liability $ ( 2 ) $ ( 1 )
Non-current liability ( 34 ) ( 31 )

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The accumulated benefit obligations for all defined benefit pension plans were $ 161 million and $ 156 million as of December 31, 2025 and 2024, respectively. The following table summarizes key pension plan information regarding plans whose accumulated benefit obligations exceed the fair value of their respective plan assets:

December 31,
(in millions) 2025 2024
Aggregate projected benefit obligation $ 167   $ 159  
Aggregate accumulated benefit obligation 161   156  
Aggregate fair value of plan assets 131   127  

The following table summarizes the components of our net periodic benefit cost:

For the Year Ended December 31,
(in millions) 2025 2024 2023
Service cost $ 3   $ 3   $ 3  
Interest cost 9   9   9  
Expected return on assets ( 6 ) ( 6 ) ( 8 )

Settlements 1   1   1  
Total net periodic benefit costs $ 7   $ 7   $ 5  

We use the corridor approach for amortization of actuarial gains or losses. The corridor is calculated as 10% of the greater of the plans' projected benefit obligation or assets. The amortization period for plans with active participants is the average future service of covered active employees, and the amortization period for plans with no active participants is the average future lifetime of plan participants. The estimated service costs or net actuarial losses for the defined benefit pension plans amortized from AOCI into periodic benefit cost in 2026 are expected to be insignificant.
The following table summarizes amounts included in AOCI for our defined benefit plans:

December 31,
(in millions) 2025 2024
Net actuarial loss $ 13   $ 12  
Prior service cost 3   2  
Total $ 16   $ 14  

Contributions and Expected Benefit Payments
The following table summarizes the contributions made to our defined benefit plans for the years ended December 31, 2025, 2024, and 2023, as well as our projected contributions for the year ended December 31, 2026:

Projected For the Year Ended December 31,
(in millions) 2026 2025 2024 2023
Non-discretionary contributions $ 8   $ 7   $ 6   $ 12  

The following table summarizes the estimated future benefit payments for our defined benefit plans: